**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**





**FORM
      10-QSB**





(Mark
      One)


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





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





**[
      ] 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
      1110, 521 - 3 Avenue SW


Calgary,
      Alberta


Canada
      T2P 3T3


(Address
      of Principal Executive Offices)





(403)
      262-4471


(Registrant’s
      telephone number, including area code)





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





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





Yes
      [x] No
      [
      ]





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
      September 1, 2006, the Company had 20,482,530 shares of its par value $0.0001
      common stock issued and outstanding.





Transitional
      Small Business Disclosure Format (check one):





Yes
      [
      ] No
      [X]










**TRIANGLE
      PETROLEUM CORPORATION**





Quarterly
      Report on Form 10-QSB for the


Quarterly
      Period Ending July 31, 2006





Table
      of
      Contents





PART
                I. FINANCIAL INFORMATIONItem
                1.
            Financial
                StatementsConsolidated
                Balance Sheets:July
                31, 2006 (Unaudited) and January 31, 2006 (Audited)
            3Consolidated
                Statements of Operations:Three
                and Six Months Ended July 31, 2006 and 2005 (Unaudited)
                andPeriod
                from December 11, 2003 (Date of Inception) to July 31, 2006
                (Unaudited)
            4Consolidated
                Statements of Cash Flows:Six
                Months Ended July 31, 2006 and 2005 (Unaudited)
            5Notes
                to Unaudited Consolidated Financial Statements:July
                31, 2006
            6-15Item
                2.
            Management
                Discussion and Analysis
            16Item
                3.
            Controls
                and Procedures
            26PART
                II. OTHER INFORMATIONItem
                1.
            Legal
                Proceedings
            27Item
                2.
            Unregistered
                Sales of Equity Securities and Use of Proceeds
            27Item
                3.
            Defaults
                Upon Senior Securities
            27Item
                4.
            Submission
                of Matters to a Vote of Security Holders
            27Item
                5.
            Other
                Information
            27Item
                6.
            Exhibits
            27Signatures
            28








2





Triangle
      Petroleum Corporation




(An
      Exploration Stage Company)


Consolidated
      Balance Sheets


(Expressed
      in U.S. dollars)





July
                31,
              2006
              $
            
            January
                31,
              2006
              $(unaudited)ASSETSCurrent
                AssetsCash
                and cash equivalents
            
            
            18,972,807
            
            
            17,394,422Other
                current assets
            
            
            308,707
            
            
            406,356Total
                Current Assets
            
            
            19,281,514
            
            
            17,800,778Debt
                Issuance Costs, net
            
            
            1,151,769
            
            
            903,158Property
                and Equipment (Note 3)
            
            
            77,906
            
            
            69,266Oil
                and Gas Properties (Note 4)
            
            
            9,324,524
            
            
            7,065,367Total
                Assets
            
            
            29,835,713
            
            
            25,838,569LIABILITIES
                AND STOCKHOLDERS’ EQUITYCurrent
                LiabilitiesAccounts
                payable
            
            
            1,251,035
            
            
            525,659Accrued
                liabilities (Note 5)
            
            
            1,227,145
            
            
            1,116,613Due
                to related parties (Note 7)
            
            
            8,310
            
            
            1,398Total
                Current Liabilities
            
            
            2,486,490
            
            
            1,643,670Asset
                Retirement Obligations (Note 4)
            
            
            33,000
            
            
            33,000Convertible
                Debentures, less unamortized discount of $12,181,573 and $15,793,697,
                respectively (Note 6)
            
            
            17,018,427
            
            
            9,306,303Total
                Liabilities
            
            
            19,537,917
            
            
            10,982,973Commitments
                (Notes 1, 4 and 10)Stockholders’
                EquityCommon
                Stock
              Authorized:
                100,000,000 shares, par value $0.00001
              Issued:
                20,082,530 shares and 19,182,530 shares, respectively
            
            
            201
            
            
            192Additional
                Paid-In Capital
            
            
            30,510,190
            
            
            27,623,110Donated
                Capital
            
            
            11,400
            
            
            11,400Deferred
                Compensation (Note 8)
            
            
            (2,771,667
            )
            
            (4,486,667
            )Deficit
                Accumulated During the Exploration Stage
            
            
            (17,452,328
            )
            
            (8,292,439
            )Total
                Stockholders’ Equity
            
            
            10,297,796
            
            
            14,855,596Total
                Liabilities and Stockholders’ Equity
            
            
            29,835,713
            
            
            25,838,569




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




3




Triangle
      Petroleum Corporation


(An
      Exploration Stage Company)


Consolidated
      Statements of Operations


(Expressed
      in U.S. dollars except loss per share)


(unaudited)








Accumulated
                from
              December
                11, 2003
              (Date
                of Inception)
              to
                July 31,
            
            Three
              Months
              Ended
              July
                31,
            
            Three
              Months
              Ended
              July
                31,
            
            Six
              Months
              Ended
              July
                31,
            
            Six
              Months
              Ended
              July
                31,2006
            
            2006
            
            2005
            
            2006
            
            2005$
            
            $
            
            $
            
            $
            
            $Revenue
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -Operating
                ExpensesDepreciation
            
            
            16,855
            
            
            6,458
            
            
            -
            
            
            12,238
            
            
            4,064General
                and administrative
            
            
            8,699,721
            
            
            2,464,697
            
            
            203,607
            
            
            4,614,124
            
            
            223,367Impairment
                loss on oil and gas properties
            
            
            1,062,650
            
            
            44,937
            
            
            -
            
            
            44,937
            
            
            -Total
                Operating Expenses
            
            
            9,779,226
            
            
            2,516,092
            
            
            203,607
            
            
            4,671,299
            
            
            227,431Net
                Loss from Operations
            
            
            (9,779,226
            )
            
            (2,516,092
            )
            
            (203,607
            )
            
            (4,671,299
            )
            
            (227,431
            )Other
                Income (Expense)Accretion
                of discounts on convertible debentures
            
            
            (6,515,484
            )
            
            (1,700,194
            )
            
            -
            
            
            (3,752,068
            )
            
            (375,000
            )Amortization
                of debt issue costs
            
            
            (228,232
            )
            
            (94,098
            )
            
            -
            
            
            (176,390
            )
            
            -Interest
                income
            
            
            330,230
            
            
            170,030
            
            
            4,097
            
            
            278,756
            
            
            4,097Interest
                on long-term debt
            
            
            (1,227,145
            )
            
            (442,258
            )
            
            (435,000
            )
            
            (838,888
            )
            
            (60,000
            )Total
                Other Income (Expense)
            
            
            (7,640,631
            )
            
            (2,066,520
            )
            
            (430,903
            )
            
            (4,488,590
            )
            
            (430,903
            )Net
                Loss Before Discontinued Operations
            
            
            (17,419,857
            )
            
            (4,582,612
            )
            
            (634,510
            )
            
            (9,159,889
            )
            
            (658,334
            )Discontinued
                Operations
            
            
            (32,471
            )
            
            -
            
            
            (15,000
            )
            
            -
            
            
            (30,000
            )Net
                Loss for the Period
            
            
            (17,452,328
            )
            
            (4,582,612
            )
            
            (649,510
            )
            
            (9,159,889
            )
            
            (688,334
            )Net
                Loss Per ShareContinuing
                Operations - Basic and Diluted
            
            
            
            
            
            (0.23
            )
            
            (0.03
            )
            
            (0.47
            )
            
            (0.02
            )Discontinued
                Operations - Basic and Diluted
            
            
            
            
            
            -
            
            
            -
            
            
            -
            
            
            -(0.23
            )
            
            (0.03
            )
            
            (0.47
            )
            
            (0.02
            )Weighted
                Average Number of Shares Outstanding
            
            
            
            
            
            20,013,000
            
            
            22,087,000
            
            
            19,487,000
            
            
            33,984,000




The
        accompanying notes are an integral part of these consolidated  financial
        statements
 
 4





Triangle
      Petroleum Corporation


(An
      Exploration Stage Company)


Consolidated
      Statements of Cash Flows


(Expressed
      in U.S. dollars)


(unaudited)





Six
                Months
              Ended
              July
                31,
            
            Six
                Months
              Ended
              July
                31,2006
            
            2005$
            
            $Operating
                ActivitiesNet
                loss for the period
            
            
            (9,159,889
            )
            
            (688,334
            )Adjustments
                to reconcile net loss to net cash used in operating and financing
                activities:Accretion
                of discounts on convertible debentures
            
            
            3,752,068
            
            
            375,000Amortization
                of debt issuance costs
            
            
            176,389
            
            
            -Depreciation
            
            
            12,238
            
            
            4,064Donated
                consulting services and rent
            
            
            -
            
            
            2,000Stock-based
                compensation
            
            
            3,562,145
            
            
            93,125Changes
                in operating assets and liabilitiesOther
                current assets
            
            
            207,257
            
            
            (86,986
            )Accounts
                payable and accrued liabilities
            
            
            (281,735
            )
            
            83,543Due
                to related parties
            
            
            6,912
            
            
            (28,416
            )Net
                Cash Used in Operating Activities
            
            
            (1,724,615
            )
            
            (246,004
            )Investing
                ActivitiesPurchase
                of property and equipment
            
            
            (20,879
            )
            
            (2,342
            )Oil
                and gas property expenditures
            
            
            (1,251,121
            )
            
            (597,021
            )Net
                Cash Used in Investing Activities
            
            
            (1,272,000
            )
            
            (599,363
            )Financing
                ActivitiesProceeds
                from issuance of convertible debentures
            
            
            5,000,000
            
            
            6,000,000Debt
                issuance costs
            
            
            (425,000
            )
            
            (65,000
            )Proceeds
                from issuance of common stock
            
            
            -
            
            
            60,000Net
                Cash Provided by Financing Activities
            
            
            4,575,000
            
            
            5,995,000Increase
                in Cash and Cash Equivalents
            
            
            1,558,385
            
            
            5,149,633Cash
                and Cash Equivalents - Beginning of Period
            
            
            17,394,422
            
            
            148,102Cash
                and Cash Equivalents - End of Period
            
            
            18,972,807
            
            
            5,297,735Non-cash
                Investing and Financing ActivitiesDiscount
                on stock issued
            
            
            -
            
            
            1,715,000Stock
                issued for conversion of debenture
            
            
            900,000
            
            
            -Supplemental
                Disclosures:Interest
                paid
            
            
            -
            
            
            -Income
                taxes paid
            
            
            -
            
            
            -




The
        accompanying notes are an integral part of these consolidated  financial
        statements
 
 5




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


**1.**  **Exploration
      Stage Company**




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




The
      Company has been in the exploration stage since its formation in December 2003
      and has not yet realized any revenues from its planned operations. It is
      primarily engaged in the acquisition, exploration and development of oil and
      gas
      resource properties. The ability of the Company to emerge from the exploration
      stage with respect to planned principal business activities is dependent upon
      its successful efforts to raise additional equity financing and generate
      significant revenue. The Company has incurred losses of $17,452,328 since
      inception and has working capital of $16,795,024 as at July 31, 2006. During
      the
      year ended January 31, 2006, the Company issued $26,000,000 of convertible
      debentures. During the six month period ended July 31, 2006, the Company issued
      an additional $5,000,000 of convertible debentures. Management plans to raise
      additional capital through equity and/or debt financings. There is no guarantee
      that the proceeds from the financings raised by the Company, or proceeds from
      any future financings, will be sufficient to complete any of the above
      objectives. These factors raise substantial doubt regarding the Company’s
      ability to continue as a going concern.





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




a)
            Basis
                of Presentation




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




b)
            Use
                of Estimates




The
      preparation of consolidated 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 consolidated
      financial statements and the reported amounts of revenues and expenses during
      the reporting period. Actual results could differ from those estimates.




c)
            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. As at July 31, 2006,
      $18,177,726 represented cash equivalents.




d)
            Foreign
                Currency Transactions




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




e)
            Interim
                Consolidated Financial Statements




These
      interim consolidated unaudited financial statements for the period ended July
      31, 2006 have been prepared on the same basis as the annual consolidated
      financial statements and in the opinion of management, reflect all adjustments,
      which include only normal recurring adjustments, necessary to present fairly
      the
      Company’s financial position, results of operations and cash flows for the
      periods shown. The results of operations for such periods are not necessarily
      indicative of the results expected for a full year or for any future
      period.




6




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




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




f)
            Property
                and Equipment




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




g)
            Long-lived
                Assets




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




h)
            Asset
                Retirement Obligations




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




i)
            Oil
                and Gas Properties




The
      Company utilizes the full-cost method of accounting for petroleum and natural
      gas properties. Under this method, the Company capitalizes all costs associated
      with acquisition, exploration and development of oil and natural gas reserves,
      including leasehold acquisition costs, geological and geophysical expenditures,
      lease rentals on undeveloped properties and costs of drilling of productive
      and
      non-productive wells into the full cost pool on a country by country basis.
      As
      of July 31, 2006, the Company had no properties with proven reserves. When
      the
      Company obtains proven oil and gas reserves, capitalized costs, including
      estimated future costs to develop the reserves proved and estimated abandonment
      costs, net of salvage, will be depleted on the units-of-production method using
      estimates of proved reserves. The costs of unproved properties are not amortized
      until it is determined whether or not proved reserves can be assigned to the
      properties. Until such determination is made, the Company assesses annually
      whether impairment has occurred, and includes in the amortization base drilling
      exploratory dry holes associated with unproved properties.




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




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. As of July 31, 2006, all of the
      Company’s oil and gas properties were unproved and were excluded from
      amortization.




7




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)**




j)
            Debt
                Issue Costs




In
      accordance with the Accounting Principles Board Opinion 21 *“Interest
      on Receivables and Payables”,* the
      Company recognizes debt issue costs on the balance sheet as deferred charges,
      and amortizes the balance over the term of the related debt. The Company follows
      the guidance in the EITF 95-13 *“Classification
      of Debt Issue Costs in the Statement of Cash Flows”* and
      classifies cash payments for debt issue costs as a financing activity. During
      the six month period ended July 31, 2006, the Company recognized amortization
      expense of $176,390.




k)
            Income
                Taxes




Potential
      benefits of income tax losses are not recognized in the accounts until
      realization is more likely than not. 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. 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.




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




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




m)
            Financial
                Instruments




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




n)
            Concentration
                of Risk




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




o)
            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 July 31, 2006 and 2005, the
      Company has no items that represent comprehensive loss and, therefore, has
      not
      included a schedule of comprehensive loss in the financial
      statements.




p)
            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.




8






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






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




p)
            Stock-based
                Compensation (continued)




As
      a
      result of adopting SFAS 123R on February 1, 2006, the Company’s loss for the six
      month period ended July 31, 2006 is $112,034 higher than if it had continued
      to
      account for share-based compensation under APB No. 25. Basic and diluted loss
      per share for the six month period ended July 31, 2006 would have remained
      unchanged at $0.23 per share.




As
      there
      were no stock options granted prior to July 31, 2005, there was no effect on
      net
      loss and loss per share if the Company had applied the fair value recognition
      provisions of SFAS No. 123 for the prior period presented.




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




On
      February 21, 2006, the Company granted stock options under the 2005 Incentive
      Stock Plan to a director to acquire 200,000 common shares at an exercise price
      of $4.55 per share exercisable to February 21, 2011. The fair value for options
      granted was estimated at the date of grant using the Black-Scholes
      option-pricing model and the weighted average fair value of the stock options
      granted was $3.84 per share. On March 24, 2006, the Company granted stock
      options to a consultant to acquire 100,000 common shares at an exercise price
      of
      $3.46 per share exercisable to March 24, 2011. The fair value for options
      granted was estimated at the date of grant using the Black-Scholes
      option-pricing model and the weighted average fair value of stock options
      granted was $3.48 per share. On July 27, 2006, the Company granted stock options
      to a consultant to acquire 300,000 common shares at an exercise price of $2.90
      per share exercisable to July 27, 2011. The fair value for options granted
      was
      estimated at the date of grant using the Black-Scholes option-pricing model
      and
      the weighted average fair value of stock options granted was $2.48 per share.
      During the six month period ended July 31, 2006, the Company recorded
      stock-based compensation of $1,331,825 as general and administrative expense.




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




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





Number
                of Options
            
            Weighted
                Average Exercise Price
              $Balance,
                January 31, 2006
            
            
            1,330,000
            
            
            3.28Granted
            
            
            600,000
            
            
            3.54Cancelled/forfeited
            
            
            (200,000
            )
            
            3.23Balance,
                July 31, 2006
            
            
            1,730,000
            
            
            3.37




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





Outstanding
            
            ExercisableExercise
                prices
              $
            Number
                of
              shares
            Weighted
              average
              remaining
              contractual
              life
                (years)
            Weighted
              average
              exercise
                price
              $
            
            Number
                of
              shares
            Weighted
              average
              exercise
                price
              $2.90
            300,000
            4.99
            2.90
            
            60,000
            2.903.23
            930,000
            4.02
            3.23
            
            372,000
            3.233.46
            100,000
            4.65
            3.46
            
            20,000
            3.463.53
            200,000
            4.20
            3.53
            
            100,000
            3.534.55
            200,000
            4.56
            4.55
            
            40,000
            4.551,730,000
            4.21
            3.37
            
            592,000
            3.34




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)**




p)
            Stock-based
                Compensation (continued)




As
      at
      July 31, 2006, there was $2,283,449 of total unrecognized compensation costs
      related to non-vested share-based compensation arrangements granted under the
      2005 Incentive Stock Plan which are expected to be recognized over a period
      of
      21 months. A summary of the status of the Company’s non-vested shares as of July
      31, 2006, and changes during the six months ended July 31, 2006, is presented
      below:







**Non-vested
                shares**
            
            **Shares**
            
            **Weighted-Average**
              **Grant-Date**
              **Fair
                Value**Non-vested
                at February 1, 2006
            
            
            1,054,000
            
            $
            2.67Granted
            
            
            600,000
            
            $
            3.10Vested
            
            
            (516,000
            )
            $
            2.77Non-vested
                at July 31, 2006
            
            
            1,138,000
            
            $
            2.85









q)
            Recent
                Accounting Pronouncements




In
      May
      2005, the Financial Accounting Standards Board (FASB) issued SFAS No. 154,
      “ *Accounting
      Changes and Error Corrections - A Replacement of APB Opinion No. 20 and SFAS
      No.
      3* ”.
      SFAS
      154 changes the requirements for the accounting for and reporting of a change
      in
      accounting principle and applies to all voluntary changes in accounting
      principle. It also applies to changes required by an accounting pronouncement
      in
      the unusual instance that the pronouncement does not include specific transition
      provisions. SFAS 154 requires retrospective application to prior periods’
financial statements of changes in accounting principle, unless it is
      impracticable to determine either the period-specific effects or the cumulative
      effect of the change. The provisions of SFAS No. 154 are effective for
      accounting changes and correction of errors made in fiscal years beginning
      after
      December 15, 2005. The adoption of this standard did not have a material effect
      on the Company’s results of operations or financial position.




In
      December 2004, FASB issued SFAS No. 153, “ *Exchanges
      of Nonmonetary Assets - An Amendment of APB Opinion No. 29* ”.
      The
      guidance in APB Opinion No. 29, “ *Accounting
      for Nonmonetary Transactions* ”,
      is
      based on the principle that exchanges of nonmonetary assets should be measured
      based on the fair value of the assets exchanged. The guidance in that Opinion,
      however, included certain exceptions to that principle. SFAS No. 153 amends
      Opinion No. 29 to eliminate the exception for nonmonetary exchanges of similar
      productive assets and replaces it with a general exception for exchanges of
      nonmonetary assets that do not have commercial substance. A nonmonetary exchange
      has commercial substance if the future cash flows of the entity are expected
      to
      change significantly as a result of the exchange. The provisions of SFAS No.
      153
      are effective for nonmonetary asset exchanges occurring in fiscal periods
      beginning after June 15, 2005. Early application is permitted and companies
      must
      apply the standard prospectively. The adoption of this standard did not have
      a
      material effect on the Company’s results of operations or financial
      position.




In
      2006,
      the FASB has issued SFAS No. 155 *“Accounting
      for Certain Hybrid Financial Instruments - an amendment of FASB Statements
      No.
      133 and 140”* and No.
      156 *“Accounting
      for Servicing of Financial Assets - an amendment of FASB Statement No.
      140”* ,
      but
      they will not have a material effect in the Company’s results of operations or
      financial position. Therefore, a description and its impact for each on the
      Company’s operations and financial position have not been
      disclosed.




r)
            Reclassifications




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




10




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





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




Cost
              $
            
            Accumulated
              Depreciation
              $
            
            July
                31,
              2006
              Net
                Carrying
              Value
              $
            
            January
                31,
              2006
              Net
                Carrying
              Value
              $Computer
                hardware
            
            
            46,824
            
            
            8,902
            
            
            37,922
            
            
            32,804Furniture
                and equipment
            
            
            33,855
            
            
            5,003
            
            
            28,852
            
            
            29,573Geophysical
                software
            
            
            8,000
            
            
            2,444
            
            
            5,556
            
            
            6,889Leasehold
                Improvements
            
            
            6,083
            
            
            507
            
            
            5,576
            
            
            -94,762
            
            
            16,856
            
            
            77,906
            
            
            69,266





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





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





Acquisition
              $
            
            Exploration
              $
            
            Impairment
              Loss
              $
            
            July
                31,
              2006
              Net
                Carrying
              Value
              $
            
            January
                31,
              2006
              Net
                Carrying
              Value
              $Canadian
                properties
            
            
            1,851,220
            
            
            2,361,063
            
            
            -
            
            
            4,212,283
            
            
            3,411,226US
                properties
            
            
            3,860,184
            
            
            2,269,770
            
            
            (1,017,713
            )
            
            5,112,241
            
            
            3,654,141Totals
            
            
            5,711,404
            
            
            4,630,833
            
            
            (1,017,713
            )
            
            9,324,524
            
            
            7,065,367




All
      of
      the Company’s oil and gas properties are unproven and 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
                October 19, 2005, the Company entered into a Participation Agreement
                with
                a Texas based joint venture partner to earn a 30% interest in certain
                prospects located in the Southern Fort Worth Basin, Texas. The Company
                must pay $597,600, of which $300,000 has been paid, and the balance
                is
                payable on October 30, 2006.




(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. The Company
                paid
                $2,000,000 in fiscal 2006 and is committed to pay up to an additional
                $2,492,334. The Company must pay 33.333% of the costs of drilling
                the
                first well, and 25% of the costs thereafter. In fiscal 2006, the
                Company
                recognized an impairment loss of $1,017,713 related to an evaluation
                well
                located on the Colorado acreage. This impairment loss includes $33,000
                in
                asset retirement obligations accrued which is the Company’s estimated
                share of the costs to abandon and reclaim this well. The reclamation
                work
                is not expected to occur within the next twelve
                months.







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




The
      components of accrued liabilities are as follows:





July
                31,
              2006
              $
            
            January
                31,
              2006
              $Interest
            
            
            1,227,145
            
            
            388,258Oil
                and gas expenditures
            
            
            -
            
            
            725,855Professional
                fees
            
            
            -
            
            
            33,000Total
                accrued liabilities
            
            
            1,227,145
            
            
            1,116,613




11




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





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




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




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




In
      accordance with EITF 98-5 *“Accounting
      for Convertible Securities with Beneficial Conversion Features or Contingently
      Adjustable Conversion Ratios”,* the
      Company recognized the value of the embedded beneficial conversion feature
      of
      $2,666,667 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 $3,333,333
      as
      additional paid-in capital and an equivalent discount against the convertible
      debentures. During the year ended January 31, 2006, a debenture with a principal
      amount of $900,000 was converted into 900,000 shares of common stock. The
      unamortized discount on the respective convertible debenture of $378,722 was
      charged to accretion expense. During the six month period ended July 31, 2006,
      debentures with a principal amount of $900,000 were converted into 900,000
      shares of common stock. The unamortized discount on the respective convertible
      debentures of $794,932 was charged to accretion expense. The Company will record
      interest expense over the term of the remaining convertible debentures of
      $4,200,000 resulting from the difference between the stated value and carrying
      value at the date of issuance. To July 31, 2006, accrued interest of $477,830
      has been included in accrued liabilities, and interest expense of $1,837,500
      has
      been accreted increasing the carrying value of the convertible debentures to
      $2,362,500. Refer to Note 11.







(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.




12




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




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




In
      connection with the Purchase Agreement, the
      Company also
      entered into a registration rights
      agreement (the
“Registration Rights
      Agreement ”)
      providing for the filing of an SB-2 Registration Statement (the “Registration
      Statement”) with the U.S. Securities and Exchange Commission (“SEC”) registering
      the common stock issuable upon conversion of the convertible debentures. The
      Company is
      obligated to use its best efforts to cause the Registration Statement to be
      declared effective no later than June
      30,
      2006 and to
      insure that the Registration Statement remains in effect until all of the shares
      of common stock issuable upon conversion of the convertible debentures have
      been
      sold. In the event of a default of its obligations under the Registration Rights
      Agreement ,
      including its agreement to file the Registration Statement with the SEC no
      later
      than January
      22, 2006 ,
      or if
      the Registration Statement is not declared effective by June
      30,
      2006 ,
      it is
      required pay to the investor, as liquidated damages, for each month that the
      Registration Statement has not been filed or declared effective, as the case
      may
      be, either a cash amount or shares of common stock equal to 2% of the liquidated
      value of the convertible debentures. The Company filed an SB-2 Registration
      Statement on January 18, 2006. This SB-2 Registration Statement was declared
      effective on May 25, 2006.




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




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




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
      $2,697,057 as additional paid-in capital and an equivalent discount which will
      be expensed over the term of convertible debentures. The carrying value of
      the
      convertible debentures will be accreted to the face value of $15,000,000 to
      maturity. To July 31, 2006, accrued interest of $334,247 has been included
      in
      accrued liabilities, and interest expense of $2,188,821 has been accreted
      increasing the carrying value of the convertible debentures to
      $12,811,179.




(c)
            On
                December 28, 2005, the Company entered into a Securities Purchase
                Agreement with two accredited investors providing for the sale byto
                the investors of 7.5% convertible debentures in the aggregate principal
                amount of $10,000,000 of which $5,000,000 was advanced immediately
                and
                1,250,000 warrants (the “Warrants”) to purchase 1,250,000 shares of’s
                common stock, exercisable at a price of $5.00 per share until,
                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 bywith
                the SEC.




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




In
      connection with the Securities Purchase Agreement, the
      Company also
      entered into a registration rights
      agreement (the
“Registration Rights Agreement”) providing for the filing of a registration
      statement (the “Registration Statement”) with the SEC registering the common
      stock issuable upon conversion of the convertible debentures and Warrants. The
      Company is
      obligated to use its best efforts to cause the Registration Statement to be
      declared effective no later than May
      28,
      2006 and to
      insure that the registration statement remains in effect until all of the shares
      of common stock issuable upon conversion of the convertible debentures have
      been
      sold. In the event of a default of its obligations under the Registration Rights
      Agreement, including its agreement to file the Registration Statement with
      the
      SEC no later than February
      26, 2006 ,
      or if
      the Registration Statement is not 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. This SB-2 Registration Statement was declared effective on
      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.




13




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




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




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
      $6,609,128 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 $3,390,872
      as
      additional paid-in capital and an equivalent discount against the convertible
      debentures. The Company will record further interest expense over the term
      of
      the Convertible Debentures of $10,000,000 resulting from the difference between
      the stated value and carrying value at the date of issuance. The carrying value
      of the convertible debentures will be accreted to the face value of $10,000,000
      to maturity. To July 31, 2006, accrued interest of $415,068 has been included
      in
      accrued liabilities, and interest expense of $1,844,748 has been accreted
      increasing the carrying value of the Convertible Debentures to
      $1,844,748.





**7.**  **Related
      Party Transactions**




a)
            The
                Company paid the former Secretary of the Company $8,000 during the
                six
                month period ended July 31, 2005 for consulting services provided.
                Previously, the former Secretary provided consulting services to
                the
                Company valued at $250 per month. No amounts were recognized for
                donated
                services for the six month period ended July 31,
                2005.




b)
            During
                the six month period ended July 31, 2006, the Company incurred $20,000
                in
                director’s fees.




c)
            Effective
                September 1, 2005, the Company agreed to pay $10,700 per month for
                management services provided by the President of the Company. This
                agreement was terminated January 31, 2006, and effective February
                1, 2006,
                the Company agreed to pay a salary of Cdn$12,000 per month to the
                President of the Company. During the six month period ended July
                31, 2006,
                $63,558 (Cdn$72,000) was charged to operations.




d)
            On
                June 23, 2005, the Company entered into a management consulting agreement
                with the President of the Company’s subsidiary. Under the terms of the
                agreement, the Company must pay $20,000 per month for an initial
                term of
                two years, and, unless notice of termination is given by either party,
                is
                automatically renewed for one year periods. During the six month
                period
                ended July 31, 2006, $120,000 was charged to operations.




e)
            On
                November 14, 2005, the Company entered into a management consulting
                agreement with the Chief Financial Officer of the Company. Under
                the terms
                of the agreement, the Company must pay $10,000 per month, as well
                as an
                annual bonus based upon mutually agreed upon targets. This agreement
                terminated December 31, 2005, and effective January 1, 2006, the
                Company
                agreed to pay a salary of $10,000 per month to the Chief Financial
                Officer. During the six month period ended July 31, 2006, $60,000
                was
                charged to operations.




f)
            As
                at July 31, 2006, the Company was indebted to the President of the
                Company
                in the amount of $7,697 (January 31, 2006 - $1,397). This amount
                is for
                reimbursable business expenses incurred on behalf of the
                Company.




g)
            As
                at July 31, 2006, the Company was indebted to an officer of the Company
                in
                the amount of $613 (January 31, 2006 - $NIL). This amount is for
                reimbursable business expenses incurred on behalf of the
                Company.





**8.**  **Common
      Stock**





During
      the six months ended July 31, 2006




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




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




(c)
            Refer
                to Note 11.






14


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





**8.
      Common Stock (continued)**




During
      the six months ended July 31, 2005




(d)
            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 six month period ended July 31, 2006, $675,000
                was charged to operations. The remaining amount of $1,125,000 in
                deferred
                compensation will be amortized over the remainder of the President’s two
                year employment contract.




(e)
            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 six month period ended July 31, 2006, $1,040,000 was charged
                to
                operations. The remaining amount of $1,646,667 in deferred compensation
                will be amortized over the remainder of the President’s two year
                employment contract.








**9.**  **Share
      Purchase Warrants**




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





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








**10.**  **Commitment**




On
      July
      19, 2005, the Company entered into a lease agreement commencing October 1,
      2005
      for office premises for a four year term expiring September 30, 2009. Annual
      rent is payable at $32,972 (Cdn$36,816) for the first two years and $34,663
      (Cdn$38,704) for the remaining two years. The Company must also pay its share
      of
      occupancy costs, currently at an annual rate of $18,042 (Cdn$20,145). During
      the
      six month period ended July 31, 2006, the Company paid rent expense of $22,682.
      Future minimum lease payments over the next five fiscal years are as
      follows:





2007
            
            $
            51,0002008
            
            $
            51,0002009
            
            $
            53,0002010
            
            $
            35,0002011
            
            $
            -$
            190,000








**11.**  **Subsequent
      Event**





On
      August
      7, 2006, the Company received a notice of conversion to issue 400,000 shares
      of
      common stock upon the conversion of a convertible debenture with a principal
      amount of $400,000.




15





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







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


**Overview**





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





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





**Month
                and Year**
            **Oil
                price per barrel**
            **Natural
                Gas price Henry Hub Nymex (US$/mmbtu)**
            **Month
                and Year**
            **Oil
                price per barrel**
            **Natural
                Gas price Henry Hub Nymex (US$/mmbtu)**August
                2005
            $65
            $7.65
            August
                2004
            $44
            $6.05September
                2005
            $66
            $10.85
            September
                2004
            $46
            $5.08October
                2005
            $62
            $13.91
            October
                2004
            $53
            $5.72November
                2005
            $58
            $13.83
            November
                2004
            $48
            $7.63December
                2005
            $59
            $11.18
            December
                2004
            $43
            $7.98January
                2006
            $66
            $11.43
            January
                2005
            $47
            $6.21February
                2006
            $62
            $8.40
            February
                2005
            $48
            $6.29March
                2006
            $63
            $7.11
            March
                2005
            $54
            $6.30April
                2006
            $70
            $7.23
            April
                2005
            $53
            $7.32May
                2006
            $71
            $7.20
            May
                2005
            $49
            $6.75June
                2006
            $71
            $5.93
            June
                2005
            $57
            $6.12July
                2006
            $74
            $5.89
            July
                2005
            $59
            $6.98





This
      is
      consistent with most oil and gas analysts calling for continued high commodity
      prices due to strong or rising demand in the United States, China and India
      relative to regular supply disruptions in the Middle East, Gulf Coast states
      and
      other areas. Although these strong commodity prices have resulted in extremely
      competitive conditions for the supply of products and services for exploration
      companies, our outlook remains positive. Despite these strong fundamentals,
      it
      should be noted that short term fluctuations in North American natural gas
      prices will occur based upon seasonal weather patterns and gas storage levels.




16







**Plan
      of Operations**





We
      believe that there are six critical elements for building a successful oil
      and
      gas exploration company in the current environment:





1.
            People
                - this includes a qualified board of directors, advisory board members,
                management, employees, and
                consultants;


2.
            Projects
                - a credible portfolio of projects that have the appropriate risk-return
                ratio in order to generate potentially significant shareholder
                value;


3.
            Capital
                - based upon the reputation of the people and the quality of the
                projects,
                there must be sufficient capital in order to launch the company and
                to
                provide for additional fundings;


4.
            Technology
                - the most advanced interpretation methods, techniques and methods
                should
                be utilized in order to maximize the potential for finding and developing
                oil and gas reserves;


5.
            Land
                position - the competitive nature of the oil and gas industry requires
                a
                combination of approaches in order to secure sufficient land positions
                to
                explore for oil and gas; and


6.
            Drilling
                capability - the competitive nature of the oilfield service industry
                requires a unique approach and a significant capital commitment in
                order
                to secure a drilling rig in today’s
                marketplace.





**People:**





In
      late
      May 2005, Mark Gustafson was hired as our President, Chief Executive Officer
      and
      director with a mandate to aggressively transform us into an emerging oil and
      gas exploration company. In June 2005, we recruited two additional directors,
      John Carlson (engineer) and Ron Hietala (petrophysicist). Mr. Hietala was then
      retained as the President and director of our Alberta operating subsidiary,
      Elmworth Energy Corporation (“Elmworth”). On October 27, 2005, Mr. Hietala’s
      role was further expanded to include being appointed President of Triangle
      (USA)
      Petroleum Corporation (“Triangle USA”). Mr. Hietala’s specific mandate is to
      build a complete organization under his direction in Elmworth and Triangle
      USA
      based upon his 30 years experience in the oil and gas industry. Specifically,
      Mr. Hietala’s 19 year career and contacts at Canadian Hunter Exploration Ltd.
      continues to be critical in order to attract qualified employees and consultants
      for Elmworth and Triangle USA. In November 2005, we hired Aly Musani as our
      Chief Financial Officer to oversee all of our financial operations. In March
      2006, Mr. Musani’s role was expanded as he was appointed to the role of
      Secretary and Treasurer.





We
      have
      contracted several significant additions to the operating team in Elmworth
      based
      upon Mr. Hietala’s contacts, including landmen, geologists, geophysicists and
      engineers. We added Mr. Clarence Campbell, an industry recognized clastic
      sedimentologist and stratigrapher, who has worked extensively both domestically
      and internationally. Mr. Campbell’s practical, hands on experience in Western
      Canada is a strong asset to the integrated geological and geophysical projects.
      Another addition to the geoscience team is Mr. Arthur Bowman. Mr. Bowman
      received a BSc. from University of Toronto in 1977 and began his geophysical
      career in Calgary with Chevron Canada Resources Ltd. At Chevron, Mr. Bowman
      worked as an interpreter on various projects in Alberta and North Eastern
      British Columbia. More recently, Mr. Bowman was a founder of Defiant Energy
      Corp. The company commenced operations in 1998 and established production of
      3,500 barrels of oil equivalent per day until the company was sold to Advantage
      Energy Trust in 2004. Mr. Bowman acted as geophysicist, geologist and
      Vice-President of Exploration. We further strengthened our operational team
      with
      the hiring of Troy Wagner, P.Eng., MBA, effective August 8, 2006 as Chief
      Operating Officer and Vice-President Engineering. Mr. Wagner has spent the
      past
      10 years at a publicly traded oil and gas company where he was Vice-President
      Operations of two companies with combined production of approximately 36,000
      barrels of oil equivalent per day, a capital expenditure budget of $160 million
      Cndn and an operating budget of $110 million Cndn. His responsibilities included
      leading the technical teams (engineering and geoscience) and field based staff,
      approving all capital projects, managing budgets and integrating acquisitions.
      Mr. Wagner earned a Bachelor of Science in Mechanical Engineering from the
      University of Calgary (1992) and a Masters of Business Administration from
      Queens University in Kingston (2003).





In
      February 2006, we added Stephen A. Holditch to our board of directors. Since
      January 2004, Mr. Holditch has been the Head of the Department of Petroleum
      Engineering at Texas A&M University. Since 1976 through the present, Mr.
      Holditch has been a faculty member at Texas A&M University, as an Assistant
      Professor, Associate Professor, Professor and Professor Emeritus. Since its
      founding in 1977 until 1997, when it was acquired by Schlumberger Technology
      Corporation, Mr. Holditch was the Founder and President of S.A. Holditch &
Associates, Inc., a petroleum
      technology company providing analysis of low permeability gas reservoirs and
      designing hydraulic fracture treatments. Mr. Holditch previously worked for
      Shell Oil Company and Pan American Petroleum Corporation. Mr. Holditch is a
      registered professional engineer in Texas, has received numerous honors, awards
      and recognitions and has authored or co-authored over 100 publications on the
      oil and gas industry. Mr.
      Holditch received his B.S., M.S. and Ph.D. in Petroleum Engineering from Texas
      A&M University in 1969, 1970 and 1976, respectively. We continue to seek
      additional qualified candidates to join our Board of Directors.




17





We
      do not
      intend to hire a significant number of employees over the next twelve months,
      as
      we intend to utilize our strong industry contacts with top quality consultants
      and contractors.





**Projects:**





During
      the six months ended July 31, 2006, we further refined our strategic plan and
      have determined that the maximum value to all of our stakeholders is best served
      by targeting three focused project areas that provide geographical
      diversification and acceptable returns for invested capital. The three major
      project areas are as follows:





*Barnett
      Shale Project - Greater Fort Worth Basin, Texas*





Through
      our operating subsidiary, Triangle USA, we have a 30% interest in a large joint
      venture area in the Barnett Shale of the Greater Fort Worth Basin. The joint
      venture was established through a strategic relationship with Kerogen Resources
      of Houston, Texas.





The
      Barnett Shale trend was pioneered by Mitchell Energy starting in 1981.
      Commercialization of the project was slow to occur until the application of
      large water fracturing stimulations at the Newark East Field in 1997. A second
      technology breakthrough occurred with the application of horizontal wells and
      selective stimulations. The Barnett Shale trend now supports daily production
      in
      excess of 1.2 bcf per day of natural gas with the USGS (United States Geological
      Survey) estimating a resource potential of greater than 25 tcf (trillion cubic
      feet) of natural gas. The Barnett Shale trend is the largest gas field in Texas
      with the productive limits being expanded regularly. Triangle USA has entered
      into the Barnett Shale trend through a joint venture with Kerogen Resources
      Inc.
      of Houston, Texas. Kerogen’s focus is to identify and exploit present and future
      shale gas projects within the United Sates and internationally. The principals
      of Kerogen also have many years of shale gas evaluation experience coupled
      with
      active involvement in the drilling, completion and production phases of Barnett
      Shale gas. Triangle USA, along with the joint venture partners, have commenced
      a
      land acquisition phase in the Fort Worth Basin (Texas). To
      date,
      9,500 acres have been secured through the Kerogen joint venture. A ten square
      mile initial 3-D seismic program has been designed. The data has been recently
      processed and interpreted, however, further evaluation is needed before
      determining the course of action for this project. Well spacing for the Barnett
      Shale ranges from 40 to 100 acres across the productive areas. Triangle
      USA believes the Barnett Shale trend to be an exploration opportunity that
      will
      continue to benefit from the application of new technology and sound field
      procedures.





Triangle
      USA is also currently participating in the drilling of three Barnett Shale
      wells
      in the Greater Fort Worth Basin. The wells are anticipated to be an extension
      of
      the productive trend. The drilling and completion program is a pilot project
      for
      a new completion technique designed to access incremental reserves and to
      establish higher levels of initial well productivity. Triangle USA has a 6.75%
      working interest in the project. The three horizontal wells in this multi-well
      project have been drilled to the projected total depth. The timing of the
      stimulation will be coordinated with the construction of pipeline and production
      facilities. Stimulation procedures and techniques developed in this first pilot
      project will be applied to the significant land block currently held by Triangle
      USA and its partner group.





Triangle
      USA’s third project in Johnson County has completed drilling operations. The
      well has been multi-stage fracture stimulated and is currently on production.
      This well is located in the active development area of the Barnett Shale.
      Triangle USA Petroleum has a 6% working interest in this Johnson County project.





Triangle
      USA along with its joint venture partner, Kerogen, will also evaluate other
      shale gas projects outside of the Greater Fort Worth Basin.




18





*West
      Central Alberta Deep Basin Opportunities*





Based
      upon Mr. Hietala’s successful career at Canadian Hunter Exploration Ltd. in
      developing natural gas in northwestern Alberta (Deep Basin), our board decided
      in June 2005 to consider exploring for natural gas in this area. In order to
      confirm the potential upside for Elmworth in exploring for natural gas in this
      area, two consulting firms were engaged. Calgary based Sproule Associates
      Limited prepared an independent geological assessment of the target area in
      June
      and concluded that there was approximately 820 bcf (billion cubic feet) of
      discovered and undiscovered recoverable raw gas remaining to be produced from
      the targeted horizons. In July 2005, Calgary based Petrel Robertson Consulting
      Ltd. prepared a broader geological resource assessment of this target area
      and
      concluded that the estimated gas in place is approximately 2,000 bcf. Based
      upon
      Mr. Hietala’s experience and these two reports, we have decided to explore these
      zones.





In
      October 2005, Elmworth participated in a 2,500 meter (8,250 feet) drilling
      project in the Deep Basin of West Central Alberta. This first evaluation well
      allowed us to earn the right to drill in five additional sections of land
      (approximately 3,200 acres). Elmworth has paid 38.5% of the costs. A hydraulic
      fracture stimulation program was performed on the exploration target identified
      by the operator. Commercial quantities of gas have not been tested from this
      well to date. However, Elmworth acquired proprietary well log data from this
      location that will be used to interpret the extensive 3-D seismic data currently
      under review.





In
      November 2005, Elmworth participated in a joint venture which targeted
      exploration opportunities in the south Deep Basin area of Alberta. 23 sections
      of land (approximately 14,700 acres) were earned upon the drilling of three
      commitment wells. Elmworth is participating for a 25% working interest in the
      first well. The first well was rig released in early December. A hydraulic
      fracture stimulation program was initiated on the Upper Cretaceous exploration
      targets. The primary horizon was not productive although a shallower interval
      is
      scheduled for completion. The second well is currently being evaluated for
      completion by the operator while the third well was plugged back to a shallower
      horizon. A completion program for the second well is currently under review.





*Hunter
      Energy Joint Venture Opportunity*





On
      October 31, 2005, we executed a joint venture agreement with Hunter Energy
      of
      Denver Colorado for a 25% working interest in three project areas. The joint
      venture currently has approximately 64,000 acres of mineral rights in three
      prospect areas in Colorado, Wyoming and Montana. At least one well will be
      drilled in each area. Triangle USA has committed a minimum of $4.5 million
      to
      this joint venture. Based upon the results of the initial exploratory program,
      we have the option to participate in additional land acquisitions and drilling
      programs. Hunter has a unique exploration team whose members are led by Mr.
      John
      Masters, a co-founder of Canadian Hunter Exploration Limited. Canadian Hunter
      pioneered the exploration concepts of pervasive gas saturated reservoir
      accumulations that today are known as Basin Centered Gas Fields. The
      observations and the technical understanding led by John Masters and the
      Canadian Hunter team have resulted in multi-TCF’s (trillion cubic feet) of gas
      being produced to date in the Western Canadian Sedimentary Basin. The greater
      Deep Basin today continues to be a cornerstone in the asset base of many
      Canadian and international companies. The business environment of the Rocky
      Mountain basins is attractive to establishing new projects, due to the fact
      that
      land costs, drilling density and hydrocarbon potential are all favorable in
      the
      areas selected by the experienced team at Hunter.





Triangle
      USA Petroleum Corporation has a 25% working interest in the joint venture
      properties comprised of 64,000 acres of mineral rights in three prospect areas
      in Colorado, Wyoming and Montana. The first exploration test well in Colorado
      was drilled in November 2005, the first evaluation of well logs and drill
      cuttings indicated that the well encountered the targeted objective as planned.
      The drilling rig finished operations in early January, successfully drilling
      to
      the target formations. The completion rig for the exploration test located
      in
      northwest Colorado was released in the middle of March and all technical and
      operational data gathered to date has not established the presence of commercial
      hydrocarbons. Triangle USA has reviewed the operator’s technical assessment of
      the exploration test. Triangle USA will also work with Hunter Energy to evaluate
      other hydrocarbon opportunities on the large land block that has been earned
      by
      the drilling of this first well.





**Capital:**





Based
      upon a new board of directors and an exploration program for Elmworth, we were
      able to secure a $6 million convertible debenture financing. The first tranche
      of $1 million was received in June 2005 and the balance of $5 million was
      received in July 2005. This funding was completed with one accredited investor
      and with no fees, other than legal costs to prepare a registration statement.
      This financing allowed us to proceed in the execution of our operating
      plan.




19





In
      anticipation of the significant funds required to undertake the projects
      mentioned above and to acquire additional seismic data, acquire land positions,
      and launch drilling programs, we anticipated that we would require approximately
      $25 million in additional funding. We secured a $15 million funding commitment
      from one institutional investor. We also secured a $10 million funding
      commitment from two institutional investors.





**Technology:**





One
      of
      the keys to finding natural gas is the use of available resources and advanced
      technological methods. In June 2005, Elmworth acquired new, high quality three
      dimensional seismic data covering 30 square miles in northwestern Alberta.
      This
      initial seismic data has been interpreted by the experienced team of geologists
      and geophysicists. This review was finalized during the first fiscal quarter
      of
      2006. **** The
      initial objective here was to identify preliminary locations to target within
      the selected area. The acquired seismic data will be used to establish
      opportunities in this multi-horizon area. We have recently made an additional
      seismic purchase in order to continue the interpretation and drilling location
      selection process. In addition to state of the art seismic interpretation,
      Elmworth will utilize advanced reservoir analysis techniques and the technical
      experience of its geological and geophysical team to further the opportunity
      identification process.




Elmworth
      has concluded two strategic technology partnerships. The first initiative is
      with the Department of Geophysics at the Colorado School of Mines under its
      Reservoir Characterization Project. This highly regarded, industry sponsored
      project, is developing advanced techniques to identify production from “Basin
      Centered” gas accumulations similar to the projects being pursued by Elmworth in
      the Alberta Deep Basin and also by Hunter Energy in the Rocky Mountain areas
      of
      the United States. The second initiative is with the Department of Geophysics
      at
      Stanford University. This project should provide Elmworth with key expertise
      related to seismic attribute analysis. Seismic attribute analysis is believed
      to
      provide new insights that will be used to identify drilling opportunities in
      the
      extensive 3-D seismic surveys being acquired by Elmworth in the Deep Basin.
      The
      strategic technology initiatives should support the Elmworth geo-science team
      and allow the team to focus on opportunity identification and land acquisition.





**Land:**





There
      are
      four different methods to acquire or participate in the leasing of oil and
      gas
      rights under the land in the target area:





(a)
            conventional
                crown land postings - under the current highly competitive environment,
                Elmworth will attempt to bid for oil and gas rights on lands that
                the
                province of Alberta owns pursuant to their regular land auction
                process.


(b)
            joint
                venture farm-ins - companies that own the oil and gas rights on land
                that
                Elmworth wishes to pursue may not be able to drill on their land
                for a
                variety of reasons (lack of capital, non-core area, etc.), which
                allows
                Elmworth the opportunity to farm-in on their lands (i.e. drill on
                their
                lands in order to earn a working interest in the
                well).


(c)
            drilling
                rig leverage - since drilling rigs are in such high demand, then
                there is
                an opportunity to utilize a secured rig as a negotiating tool to
                access
                drilling sites from other companies that have not secured a
                rig.


(d)
            technology
                leverage - through the technical strength of Elmworth’s consultants,
                contractors and advisory group there will be situations in which
                companies
                offer access to their land as a direct result of Elmworth’s willingness to
                work with their internal teams.





The
      acquisition of mineral rights on lands within the targeted area is an ongoing
      process that will continue throughout the drilling programs. To date, Elmworth
      has acquired oil and gas interests primarily via joint venture
      farm-ins.




20





**Drilling
      capability:**





Calgary
      based Crest Energy Consultants has been engaged by Elmworth to design and
      supervise all phases of the drilling and completion programs for the company
      in
      Canada.





**Projected
      Quarterly Milestones**





August
      2006 to October 2006


Ø
            Continue
                to evaluate Canadian winter drilling
                programs


Ø
            Continue
                to evaluate the Barnett Shale
                project


Ø
            Continue
                evaluating new complementary shale gas
                projects


Ø
            Establish
                limited initial production base





November
      2006 to January 2007


Ø
            Commence
                Canadian drilling program


Ø
            Commence
                drilling second well in the Hunter Energy
                program


Ø
            Continue
                evaluating and drilling wells in shale gas
                projects


Ø
            Continue
                evaluating new complementary projects and
                companies


Ø
            Expand
                upon initial production base





February
      2007 to April 2007


Ø
            Continue
                Canadian drilling program


Ø
            Continue
                drilling wells in shale gas projects


Ø
            Commence
                drilling third well in Hunter Energy
                program


Ø
            Continue
                evaluating new complementary projects and
                companies


Ø
            Continue
                to increase production base





May
      2007
      to July 2007


Ø
            Plan
                for next stage of Canadian drilling
                program


Ø
            Continue
                drilling wells in shale gas
                projects


Ø
            Evaluate
                results of the Hunter Energy drilling
                programs


Ø
            Continue
                evaluating new complementary projects and
                companies


Ø
            Continue
                to increase production base





**Liquidity
      and Capital Resources**





As
      at
      July 31, 2006, we had working capital of $16,795,024, resulting primarily from
      our cash and cash equivalents of $18,972,807. For the six months ended July
      31,
      2006, we had net cash outflow from operating activities of $1,724,615. General
      and administrative expenses for the three and six months ended July 31, 2006
      totaled $2,464,697 and $4,614,124 respectively. Included in these amounts were
      $1,964,777 and $3,562,145 of stock based compensation expense for three and
      six
      months ended July 31, 2006 respectively. Also included in the above total were
      salaries, wages and consulting fees of $259,139 and $524,758 for the three
      and
      six months ended July 31, 2006. The remaining $240,781 and $527,221 of general
      and administrative expenses for the three and six months ended July 31, 2006,
      respectively, is comprised of travel and other office related expenses. Cash
      used in investing activities totaled $1,272,000, which was primarily utilized
      for Triangle USA’s share of costs relating to its land acquisition and drilling
      activities within the Barnett Shale, and Elmworth’s acquisition of additional
      seismic data. Cash provided by financing activities totaled $4,575,000 for
      the
      six months ended July 31, 2006. On June 1, 2006 we received the final $5 million
      installment relating to the December 8, 2005 Secured Convertible Debenture
      Financing ** detailed
      below. The receipt of this final installment will provide us with the liquidity
      to fully execute our fiscal 2007 budget.





We
      expect
      significant capital expenditures during the next 12 months for seismic data
      acquisitions, land and drilling rights acquisitions, drilling programs, overhead
      and working capital purposes. We have sufficient funds to conduct our operations
      for existing budgeted projects for the next 12 months, but not for new or
      expanded projects. There can be no assurance that additional financing 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.




21





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





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





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.





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.





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:




22





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





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





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





The
      secured convertible debentures bear interest at 5%, mature three years from
      the
      date of issuance, and are convertible into our common stock, at the selling
      stockholders' option, at the lower of (i) $5.00 or (ii) 90% of the average
      of
      the three lowest daily volume weighted average prices of our common stock,
      as
      quoted by Bloomberg, LP, of the 10 trading days immediately preceding the date
      of conversion. Accordingly, there is in fact no limit on the number of shares
      into which the secured convertible debentures may be converted. As of September
      1, 2006, the average of the three lowest intraday trading prices for our common
      stock during the preceding 10 trading days as quoted by Bloomberg, LP was $2.44
      and, therefore, the conversion price for the secured convertible notes was
      $2.196. Based on this conversion price, the $15,000,000 in secured convertible
      debentures, excluding interest, were convertible into 6,830,602 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.





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





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





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





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.








**Sample
      Conversion Calculation**





The
      number of shares of common stock issuable upon conversion of the secured
      convertible debentures is determined by dividing that portion of the principal
      of the secured convertible debentures to be converted and interest, if any,
      by
      the conversion price. For example, assuming conversion of the $15,000,000 of
      secured convertible debentures, at a conversion price of $2.196 as of September
      1, 2006, the number of shares issuable upon conversion would be:





$15,000,000/$2.196
      = 6,830,601 shares




23





***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.





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. ****





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.




24





**Critical
      Accounting Policies**





*Investment
      in Oil and Gas Properties*





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




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.




*Foreign
      Currency Transactions*





Our
      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.




25




**ITEM
      3. CONTROLS AND PROCEDURES**





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





Our
      management, with the participation of our chief executive officer and chief
      financial officer, evaluated the effectiveness of our disclosure controls and
      procedures pursuant to Rule 13a-15 under the Securities Exchange Act of 1934
      as
      of July 31, 2006. In designing and evaluating the disclosure controls and
      procedures, management recognizes that any controls and procedures, no matter
      how well designed and operated, can provide only reasonable assurance of
      achieving the desired control objectives. In addition, the design of disclosure
      controls and procedures must reflect the fact that there are resource
      constraints and that management is required to apply its judgment in evaluating
      the benefits of possible controls and procedures relative to their costs.





Based
      on our evaluation, our chief executive officer and chief financial officer
      concluded that our disclosure controls and procedures are designed at a
      reasonable assurance level and are effective to provide reasonable assurance
      that information we are required to disclose in reports that we file or submit
      under the Exchange Act is recorded, processed, summarized and reported within
      the time periods specified in Securities and Exchange Commission rules and
      forms, and that such information is accumulated and communicated to our
      management, including our chief executive officer and chief financial officer,
      as appropriate, to allow timely decisions regarding required disclosure.





*(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.





There
      were no changes in our internal control over financial reporting that occurred
      during the period covered by this Quarterly Report on Form 10-QSB that have
      materially affected, or are reasonably likely to materially affect, our internal
      control over financial reporting.




26





**PART
      II - OTHER INFORMATION**




**Item
      1. Legal Proceedings.**





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





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





None.





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





None.




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





On
      July
      18, 2006, we held our annual meeting of the stockholders, at which the majority
      of stockholders approved the following actions:





1.
      To
      elect four (4) directors to serve until the 2007 Annual Meeting of Stockholders
      or until their successors have been duly elected and qualified; and





2.
      To
      adopt the Company’s 2005 Stock Incentive Plan.





At
      the
      meeting, the stockholders did not approve an action to amend our articles of
      incorporation to authorize the creation of 1,000,000 shares of blank check
      preferred stock.




**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)







27








**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:
                September 8, 2006
            By:**/s/
                MARK GUSTAFSONMark
                GustafsonPresident
                (Principal Executive Officer)Date:
                September 8, 2006
            By:**/s/
                ALY MUSANIAly
                MusaniChief
                Financial Officer (Principal Financial Officer and Principal Accounting
                Officer)







28