**U.S.
        SECURITIES AND EXCHANGE COMMISSION**
 **Washington,
        D.C. 20549**
 **FORM
        10QSB**
 (Mark
        One)
 
 x Quarterly
        report under Section 13 or 15(d) of the Securities Exchange Act of 1934 for
        the
        quarterly period ended October 31, 2005
 
 o Transition
        report under Section 13 or 15(d) of the Securities Exchange Act of
        1934
 
 For
        the
        transition period from ____________ to ______________
 
 For
        the
        Period Ended October 31, 2005
 Commission
        file number 000-51321
  **TRIANGLE
        PETROLEUM CORPORATION**
 (Name
        of
        Small Business Issuer in Its Charter)
 
 Nevada
              98-0430762(State
                  of Incorporation)
              (IRS
                  Employer Identification No.)
 
 Suite
        1110, 521 - 3 Avenue SW
 Calgary,
        Alberta
 Canada
        T2P 3T3
 
 (Address
        of Principal Executive Offices)
 
 (403)
        262-4471
  (Issuer's
        Telephone Number)
 
 Life
        Plaza, Suite 1600
 144-4th
        Avenue, SW
 Calgary,
        Alberta
 Canada
        T2P 3N4
 (Former
        name, former address and former fiscal year, if changed since last
        report)
 
 Check
        whether the issuer (1) filed all reports required to be filed by Section
        13 or
        15(d) of the Exchange Act during the past 12 months (or for such shorter
        period
        that the registrant was required to file such reports), and (2) has been
        subject
        to such filing requirements for the past 90 days.
  Yes
x No
o
 
 Indicate
        by check mark whether the registrant is a shell company (as defined in Rule
        12b-2 of the Exchange Act).
  Yes
oNo
x
  As
        of
        December 12, 2005, the Company had 18,282,530 shares of its par value $0.0001
        common stock issued and outstanding.
 
 Transitional
        Small Business Disclosure Format (check one):
 
 Yes
oNo
x
  
  **TRIANGLE
        PETROLEUM CORPORATION**
 
 Quarterly
        Report on Form 10-QSB for the
 Quarterly
        Period Ending October 31, 2005
 
 Table
        of
        Contents
 
 PART
        I.  FINANCIAL INFORMATION
 
 Item
                  1.
              Financial
                  StatementsConsolidated
                  Balance Sheets:October
                  31, 2005 (Unaudited) and January 31, 2005 (Audited)
              3Consolidated
                  Statements of Operations:Three
                  and Nine Months Ended October 31, 2005 and 2004 (Unaudited)
                  andPeriod
                  from December 11, 2003 (Date of Inception) to October 31,
                  2005(Unaudited)
              4Consolidated
                  Statements of Cash Flows:Nine
                  Months Ended October 31, 2005 and 2004 (Unaudited)
              5Notes
                  to Unaudited Consolidated Financial Statements:October
                  31, 2005
              6-11Item
                  2.
              Management
                  Discussion and Analysis
              12Item
                  3.
              Controls
                  and Procedures
              22PART
                  II. OTHER INFORMATIONItem
                  1.
              Legal
                  Proceedings
              23Item
                  2.
              Unregistered
                  Sales of Equity Securities and Use of Proceeds
              23Item
                  3.
              Defaults
                  Upon Senior Securities
              23Item
                  4.
              Submission
                  of Matters to a Vote of Security Holders
              23Item
                  5.
              Other
                  Information
              23Item
                  6.
              Exhibits
              23Signatures
              
              24
   2
  Triangle
        Petroleum Corporation
 (formerly
        Peloton Resources Inc.)
 (An
        Exploration Stage Company)
 Consolidated
        Balance Sheets
 (Expressed
        in U.S. dollars)
 
 October
                  31,
                2005
                $
              
              January
                  31,
                2005
                $(Unaudited)
              
              (Audited)ASSETSCurrent
                  AssetsCash
                  and cash equivalents
              
              
              4,249,511
              
              
              148,102Other
                  current assets
              
              
              148,806
              
              
              —Total
                  Current Assets
              
              
              4,398,317
              
              
              148,102Debt
                  Issue Costs, net of amortization of $12,189
              
              
              52,811
              
              
              —Property
                  and Equipment (Note 4)
              
              
              43,621
              
              
              —Oil
                  and Gas Properties, unproven (Note 5)
              
              
              1,365,442
              
              
              —Total
                  Assets
              
              
              5,860,191
              
              
              148,102LIABILITIES
                  AND STOCKHOLDERS’ EQUITYCurrent
                  LiabilitiesAccounts
                  payable
              
              
              55,941
              
              
              4,094Accrued
                  liabilities
              
              
              188,500
              
              
              3,750Due
                  to related parties (Note 7)
              
              
              2,487
              
              
              28,416Total
                  Current Liabilities
              
              
              246,928
              
              
              36,260Convertible
                  Debentures, less unamortized discount of $4,875,000 (Note
                  6)
              
              
              1,125,000
              
              
              —Total
                  Liabilities
              
              
              1,371,928
              
              
              36,260Contingencies
                  and Commitments (Notes 1 and 10)Stockholders’
                  EquityCommon
                  StockAuthorized:
                  100,000,000 shares, par value $0.00001Issued:
                  18,282,530 shares (January 31, 2005 - 46,282,530 shares)
              
              
              183
              
              
              463Additional
                  Paid In Capital
              
              
              9,378,846
              
              
              150,660Donated
                  Capital
              
              
              11,400
              
              
              8,400Deferred
                  Compensation (Note 8)
              
              
              (1,796,750
              )
              
              —Deficit
                  Accumulated During the Exploration Stage
              
              
              (3,105,416
              )
              
              (47,681
              )Total
                  Stockholders’ Equity
              
              
              4,488,263
              
              
              111,842Total
                  Liabilities and Stockholders’ Equity
              
              
              5,860,191
              
              
              148,102
 
 The
        accompanying notes are an integral part of these financial
        statements
  3
  Triangle
        Petroleum Corporation
 (formerly
        Peloton Resources Inc.)
 (An
        Exploration Stage Company)
 Consolidated
        Statements of Operations
 (Expressed
        in U.S. dollars)
 (Unaudited)
 
 Period
                  from
                December
                  11, 2003
                (Date
                  of Inception)
                to
                  October 31,
              
              Three
                  Months Ended
                October
                  31,
              
              Three
                  Months
                Ended
                October
                  31,
              
              Nine
                  Months Ended
                October
                  31,
              
              Nine
                  Months
                Ended
                October
                  31,2005
              
              2005
              
              2004
              
              2005
              
              2004$
              
              $
              
              $
              
              $
              
              $Revenue
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —ExpensesDepreciation
              
              
              1,289
              
              
              1,289
              
              
              —
              
              
              1,289
              
              
              —General
                  and administrative
              
              
              208,240
              
              
              157,196
              
              
              319
              
              
              193,180
              
              
              1,242Management
                  services (Notes 7 and 9)
              
              
              1,466,057
              
              
              1,305,932
              
              
              1,500
              
              
              1,459,057
              
              
              4,500Mineral
                  property costs
              
              
              32,471
              
              
              —
              
              
              —
              
              
              30,000
              
              
              —Professional
                  services
              
              
              113,305
              
              
              55,897
              
              
              1,750
              
              
              90,155
              
              
              6,400Total
                  Operating Expenses
              
              
              1,821,362
              
              
              1,520,314
              
              
              3,569
              
              
              1,773,681
              
              
              12,142Amortization
                  of Debt Issue Costs
              
              
              12,189
              
              
              8,125
              
              
              —
              
              
              12,189
              
              
              —Interest
                  Income
              
              
              (33,135
              )
              
              (29,038
              )
              
              —
              
              
              (33,135
              )
              
              —Interest
                  on Long-Term Debt (Note 6)
              
              
              1,305,000
              
              
              870,000
              
              
              —
              
              
              1,305,000
              
              
              —Total
                  Expenses
              
              
              3,105,416
              
              
              2,369,401
              
              
              3,569
              
              
              3,057,735
              
              
              12,142Net
                  Loss
              
              
              (3,105,416
              )
              
              (2,369,401
              )
              
              (3,569
              )
              
              (3,057,735
              )
              
              (12,142
              )Loss
                  Per Share - Basic and Diluted
              
              
              
              
              
              (0.13
              )
              
              —
              
              
              (0.11
              )
              
              —Weighted
                  Average Number of Shares Outstanding
              
              18,046,000
              
              
              35,000,000
              
              
              28,635,000
              
              
              35,000,000
 
 The
        accompanying notes are an integral part of these financial
        statements
  4
  Triangle
        Petroleum Corporation
 (formerly
        Peloton Resources Inc.)
 (An
        Exploration Stage Company)
 Consolidated
        Statements of Cash Flows
 (Expressed
        in U.S. dollars)
 (Unaudited)
 
 Nine
                  Months
                Ended
                October
                  31,
              
              Nine
                  Months
                Ended
                October
                  31,2005
              
              2004$
              
              $Operating
                  ActivitiesNet
                  loss
              
              
              (3,057,735
              )
              
              (12,142
              )Adjustment
                  to reconcile net loss to net cash used in operating
                  activities:Accretion
                  of convertible debt discount
              
              
              1,125,000
              
              
              —Depreciation
              
              
              1,289
              
              
              —Amortization
                  of debt issue costs
              
              
              12,189Stock-based
                  compensation
              
              
              1,371,156
              
              
              —Donated
                  consulting services and rent
              
              
              3,000
              
              
              5,400Changes
                  in operating assets and liabilitiesOther
                  current assets
              
              
              (148,806
              )
              
              —Accounts
                  payable and accrued liabilities
              
              
              236,597
              
              
              3,050Due
                  to related parties
              
              
              (25,929
              )
              
              3,730Net
                  Cash Used by Operating Activities
              
              
              (483,239
              )
              
              38Investing
                  ActivitiesPurchase
                  of property and equipment
              
              
              (44,910
              )
              
              —Oil
                  and gas property expenditures
              
              
              (1,365,442
              )
              
              —Net
                  Cash Used by Investing Activities
              
              
              (1,410,352
              )
              
              —Financing
                  ActivitiesProceeds
                  from issuance of convertible debentures
              
              
              6,000,000
              
              
              —Debt
                  issue costs
              
              
              (65,000
              )Proceeds
                  from issuance of common stock
              
              
              60,000
              
              
              —Net
                  Cash Provided by Financing Activities
              
              
              5,995,000
              
              
              —Net
                  Increase (Decrease) in Cash and Cash Equivalents
              
              
              4,101,409
              
              
              38Cash
                  and Cash Equivalents - Beginning of Period
              
              
              148,102
              
              
              50Cash
                  and Cash Equivalents - End of Period
              
              
              4,249,511
              
              
              88Non-cash
                  Investing and Financing ActivitiesStock
                  issued for services
              
              
              474,000
              
              
              —Stock-based
                  compensation
              
              
              978,906
              
              
              —Discount
                  on stock issued
              
              
              1,715,000
              
              
              —Supplemental
                  Disclosures:Interest
                  paid
              
              
              —
              
              
              —Income
                  taxes paid
              
              
              —
              
              
              —
  The
        accompanying notes are an integral part of these financial
        statements
  5
 Triangle
              Petroleum Corporation
 (formerly
              Peloton Resources Inc.)
 (An
              Exploration Stage Company)
 Notes
              to
              the Consolidated Financial Statements
 (Expressed
              in U.S. dollars)
 (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 period, 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 resource
        properties, and during the period, changed its business to focus on oil and
        gas
        resource properties. Planned principal activities have not yet begun. The
        ability of the Company to emerge from the exploration stage with respect
        to any
        planned principal business activity is dependent upon its successful efforts
        to
        raise additional equity financing and generate significant revenue. The Company
        has incurred losses of $3,105,416 since inception. During the period ended
        October 31, 2005, the Company issued $6,000,000 of convertible debentures.
        Management plans to raise additional capital through equity and/or debt
        financings. There is no guarantee that the proceeds from the financings raised
        by the Company, or proceeds from any future financings, will be sufficient
        to
        complete any of the above objectives. These factors raise substantial doubt
        regarding the Company’s ability to continue as a going concern.
  2. Summary
        of Significant Accounting Policies
  a)
              Basis
                  of Presentation
  These
        financial statements and related notes are presented in accordance with
        accounting principles generally accepted in the United States, and are expressed
        in US dollars. During the period ended October 31, 2005, the Company
        incorporated two wholly-owned subsidiaries, Elmworth Energy Corporation,
        in the
        Province of Alberta, Canada, and Triangle USA Petroleum Corporation, 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 financial statements in conformity with U.S. generally accepted
        accounting principles requires management to make estimates and assumptions
        that
        affect the reported amounts of assets and liabilities and disclosure of
        contingent assets and liabilities at the date of the financial statements
        and
        the reported amounts of revenues and expenses during the reporting period.
        Actual results could differ from those estimates.
  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. At October 31, 2005,
        the
        Company had cash equivalents of $3,032,078.
  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 financials statements, entered into derivative instruments to offset
        the impact of foreign currency fluctuations.
  e)
              Mineral
                  Property Acquisition and Exploration
                  Costs
  The
        Company has been in the exploration stage since its formation in December
        2003
        and has not realized any revenue from its planned operations. It was primarily
        engaged in the acquisition, exploration and development of mining properties.
        Mineral property acquisition and exploration costs are expensed as incurred.
        When it has been determined that a mineral property can be economically
        developed as a result of establishing proven and probable reserves, the costs
        incurred to develop such property, are capitalized. Such costs will be amortized
        using the units-of-production method over the estimated life of the probable
        reserve. If mineral properties are subsequently abandoned or impaired, any
        capitalized costs will be charged to operations.
  6
 Triangle
              Petroleum Corporation
 (formerly
              Peloton Resources Inc.)
 (An
              Exploration Stage Company)
 Notes
              to
              the Consolidated Financial Statements
 (Expressed
              in U.S. dollars)
 (Unaudited)
  2. Summary
        of Significant Accounting Policies (continued)
  f)
              Property
                  and Equipment
  Property
        and equipment consists of computer hardware, geophysical software, and furniture
        and equipment, and is recorded at cost. Computer hardware and geophysical
        software are depreciated on a straight-line basis over their estimated lives
        of
        three years. Furniture and equipment are depreciated on a straight-line basis
        over their estimated 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.
        As
        of October 31, 2005, the Company did not have any asset retirement obligations.
  i)
              Oil
                  and Gas Properties
  The
        Company utilizes the full cost method to account for its investment in oil
        and
        gas properties. Accordingly, all costs associated with acquisition, exploration
        and development 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 October 31, 2005, the Company has no properties with proven reserves.
        When
        the Company obtains proven oil and gas reserves, capitalized costs, including
        estimated future costs to develop the reserves and estimated abandonment
        costs,
        net of salvage, will be depleted on the units-of-production method using
        estimates of proved reserves. Investments in unproved properties and major
        development projects including capitalized interest, if any, are not amortized
        until proved reserves associated with the projects can be determined. If
        the
        future exploration of unproved properties is determined uneconomical, the
        amounts of such properties are added to the capitalized cost to be amortized.
        As
        of October 31, 2005, all of the Company’s oil and gas properties were unproved
        and were excluded from amortization.
  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.
  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 period ended October 31, 2005, the Company incurred debt issue costs
        of
        $65,000 and has recognized amortization expense of $12,189.
  7
 Triangle
              Petroleum Corporation
 (formerly
              Peloton Resources Inc.)
 (An
              Exploration Stage Company)
 Notes
              to
              the Consolidated Financial Statements
 (Expressed
              in U.S. dollars)
 (Unaudited)
  2. Summary
        of Significant Accounting Policies (continued)
  k)
              Basic
                  and Diluted Net Income (Loss) Per
                  Share
  The
        Company computes net income (loss) per share in accordance with SFAS No.
        128,
        " *Earnings
        per Share* "
        (SFAS
        128). SFAS 128 requires presentation of both basic and diluted earnings per
        share (EPS) on the face of the income statement. Basic EPS is computed by
        dividing net income (loss) available to common shareholders (numerator) by
        the
        weighted average number of shares outstanding (denominator) during the period.
        Diluted EPS gives effect to all dilutive potential common shares outstanding
        during the period including stock options, using the treasury stock method,
        and
        convertible preferred stock, 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.
  l)
              Financial
                  Instruments
  The
        carrying value of cash and cash equivalents, other current assets, accounts
        payable, accrued liabilities and due to related parties approximate fair
        value
        due to the relatively short maturity of these instruments.
  m)
              Concentration
                  of Risk
  The
        Company maintains its cash account in primarily one commercial bank in Calgary,
        Alberta, Canada. The Company's cash accounts are uninsured business checking
        accounts and deposits maintained in U.S. dollars, which totalled $4,249,511
        on
        October 31, 2005. At October 31, 2005, 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.
  n)
              Comprehensive
                  Loss
  SFAS
        No.
        130, “ *Reporting
        Comprehensive Income* ,”
        establishes standards for the reporting and display of comprehensive loss
        and
        its components in the financial statements. As at October 31, 2005 and 2004,
        the
        Company has no items that represent comprehensive loss and, therefore, has
        not
        included a schedule of comprehensive loss in the financial
        statements.
  o)
              Stock-Based
                  Compensation
  The
        Company has elected to apply the intrinsic value method of accounting in
        accordance with Accounting Principles Board Opinion No. 25, “Accounting for
        Stock Issued to Employees” (APB 25). Under the intrinsic value method of
        accounting, compensation expense is recognized if the exercise price of the
        Company’s employee stock options is less than the market price of the underlying
        common stock on the date of grant. Stock-based compensation for employees
        is
        recognized on the straight-line basis over the vesting period of the individual
        options. Stock options granted to non-employees are accounted for under
        Statement of Financial Accounting Standards No. 123 “Accounting for Stock-Based
        Compensation” (SFAS 123), which establishes a fair value based method of
        accounting for stock-based awards, and recognizes compensation expense based
        on
        the fair value of the stock award or fair value of the goods and services
        received, whichever is more reliably measurable. Under the provisions of
        SFAS
        123, companies that elect to account for stock-based awards in accordance
        with
        the provisions of APB 25 are required to disclose the pro forma net income
        (loss) that would have resulted from the use of the fair value based method
        under SFAS 123.
  8
 Triangle
              Petroleum Corporation
 (formerly
              Peloton Resources Inc.)
 (An
              Exploration Stage Company)
 Notes
              to
              the Consolidated Financial Statements
 (Expressed
              in U.S. dollars)
 (Unaudited)
  2. Summary
        of Significant Accounting Policies (continued)
  o)
              Stock-Based
                  Compensation (continued)
  The
        following table illustrates the effect on net loss per share as if the fair
        value method had been applied to all outstanding and vested awards in each
        period.
  Three
                  Months
                Ended
                October
                  31,
                2005
                $
              
              Three
                  Months
                Ended
                October
                  31,
                2004
                $
              
              Nine
                  Months
                Ended
                October
                  31,
                2005
                $
              
              Nine
                  Months
                Ended
                October
                  31,
                2004
                $Net
                  loss, as reported
              
              
              (2,369,401
              )
              
              (3,569
              )
              
              (3,057,735
              )
              
              (12,142
              )Add:
                  Stock-based compensation expense included in reported net loss,
                  net of
                  related tax effects
              
              
              885,906
              
              
              —
              
              
              885,906
              
              
              —Deduct:
                  Total stock-based compensation expense determined under fair value
                  based
                  method for all awards, net of related tax effects
              
              
              (976,586
              )
              
              —
              
              
              (976,586
              )
              
              —Pro
                  forma net loss
              
              
              (2,460,081
              )
              
              (3,569
              )
              
              (3,148,415
              )
              
              (12,142
              )
 
 Loss
                  per share:Basic
                  - as reported
              
              
              (0.13
              )
              
              —
              
              
              (0.11
              )
              
              —Basic
                  - pro forma
              
              
              (0.14
              )
              
              —
              
              
              (0.11
              )
              
              —
  The
        fair
        value of each option grant was estimated on the date of the grant using the
        Black-Scholes option pricing model with the following assumptions:
  Three
                  Months
                Ended
                October
                  31,
                2005
              
              Three
                  Months
                Ended
                October
                  31,
                2004
              
              Nine
                  Months
                Ended
                October
                  31,
                2005
              
              Nine
                  Months
                Ended
                October
                  31,
                2004Expected
                  dividend yield
              
              
              0%
              
              
              —
              
              
              0%
              
              
              —Expected
                  volatility
              
              
              119%
              
              
              —
              
              
              119%
              
              
              —Expected
                  life
              
              
              2.5
                  years
              
              
              —
              
              
              2.5
                  years
              
              
              —Risk-free
                  rate
              
              
              4.11%
              
              
              —
              
              
              4.11%
              
              
              —Weighted
                  average fair value
              
              
              $2.67
              
              
              —
              
              
              $2.67
              
              
              —
  p)
              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 is not expected to have
        a
        material effect on the Company’s results of operations or financial
        position.
  9
 Triangle
              Petroleum Corporation
 (formerly
              Peloton Resources Inc.)
 (An
              Exploration Stage Company)
 Notes
              to
              the Consolidated Financial Statements
 (Expressed
              in U.S. dollars)
 (Unaudited)
  2.  Summary
        of Significant Accounting Policies (continued)
  p)
              Recent
                  Accounting Pronouncements
                  (continued)
  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 is not expected
        to have a material effect on the Company’s results of operations or financial
        position.
  In
        December 2004, the Financial Accounting Standards Board (FASB) issued SFAS
        No.
        123R, “ *Share
        Based Payment* ”.
        SFAS
        123R establishes standards for the accounting for transactions in which an
        entity exchanges its equity instruments for goods or services. It also addresses
        transactions in which an entity incurs liabilities in exchange for goods
        or
        services that are based on the fair value of the entity’s equity instruments or
        that may be settled by the issuance of those equity instruments. SFAS 123R
        focuses primarily on accounting for transactions in which an entity obtains
        employee services in share-based payment transactions. SFAS 123R requires
        that
        the compensation cost relating to share-based payment transactions be recognized
        in financial statements. That cost will be measured based on the fair value
        of
        the equity or liability instruments issued. Public entities that file as
        small
        business issuers will be required to apply SFAS 123R in the first interim
        or
        annual reporting period that begins after December 15, 2005. The adoption
        of
        this standard is not expected to have a material effect on the Company’s results
        of operations or financial position.
  In
        March
        2005, the SEC staff issued Staff Accounting Bulletin No. 107 (“SAB 107”) to give
        guidance on the implementation of SFAS 123R. The Company will consider SAB
        107
        during implementation of SFAS 123R.
  q)
              Interim
                  Financial Statements
  These
        interim unaudited financial statements for the period ended October 31, 2005
        have been prepared on the same basis as the annual financial statements and
        in
        the opinion of management, reflect all adjustments, which include only normal
        recurring adjustments, necessary to present fairly the Company’s financial
        position, results of operations and cash flows for the periods shown. The
        results of operations for such periods are not necessarily indicative of
        the
        results expected for a full year or for any future period.
 
 3. Mineral
        Properties
  In
        December 2003, the Company, through its President and director, acquired
        100% of
        the rights, title and interest in six mining claims representing six units
        in
        the Greenwood Mining Division in the Province of British Columbia, Canada.
        Payment of $1,912 was required to record these mining claims and paid by
        the
        President of the Company. The claims were originally purchased by the President,
        however, title to the claims has been conveyed to the Company via an unrecorded
        deed. During the period, the Company abandoned its mineral property as a
        result
        of poor exploration results.
 
 4. Property
        and Equipment
  Cost
                $
              
              Accumulated
                Depreciation
                $
              
              October
                  31,
                2005
                Net
                  Carrying
                Value
                $
              
              January
                  31,
                2005
                Net
                  Carrying
                Value
                $Computer
                  hardware
              
              
              8,945
              
              
              
              379
              
              
              
              8,566
              
              
              
              —Geophysical
                  software
              
              
              8,000
              
              
              
              444
              
              
              
              7,556
              
              
              
              —Furniture
                  and equipment
              
              
              27,965
              
              
              
              466
              
              
              
              27,499
              
              
              
              —44,910
              
              
              
              1,289
              
              
              
              43,621
              
              
              
              —
  10
 Triangle
              Petroleum Corporation
 (formerly
              Peloton Resources Inc.)
 (An
              Exploration Stage Company)
 Notes
              to
              the Consolidated Financial Statements
 (Expressed
              in U.S. dollars)
 (Unaudited)
  5. Oil
        and
        Gas Properties, unproven
  (a)
              On
                  June 15, 2005, the Company paid $576,271 to acquire the rights
                  to three
                  dimensional seismic data for an area of 30 square miles located
                  in
                  north-western Alberta, Canada. During the period ended October
                  31, 2005,
                  the Company paid $468,421, representing 38.5% of the costs, to
                  participate
                  in the drilling of an evaluation
                  well.
  (b)
              The
                  Company entered into a Participation Agreement dated October 19,
                  2005 with
                  Kerogen Energy, Inc., 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.
  (c)
              The
                  Company entered into a Letter Agreement dated October 28, 2005
                  with Hunter
                  Energy LLC to acquire a 25% working interest in three prospects
                  located in
                  Colorado, Wyoming and Montana. The Company is committed to pay
                  up to
                  $4,492,334, and must pay $1,000,000 by November 4, 2005 (paid)
                  and an
                  additional $1,000,000 by November 30, 2005 (paid). The Company
                  must pay
                  33.333% of the costs of drilling the first well, and 25% of the
                  costs
                  thereafter.
  As
        at
        October 31, 2005, all of the Company’s oil and gas properties are considered
        unproven. Based on the status of the Company’s exploration activities,
        management has determined that no impairment has occurred. The total costs
        incurred and excluded from amortization are summarized as follows:
 
 Acquisition
                $
              
              Drilling
                $
              
              Geological
                  and Geophysical
                $
              
              Seismic
                  Data
                $
              
              October
                  31,
                2005
                Net
                  Carrying
                Value
                $
              
              January
                  31,
                2005
                Net
                  Carrying
                Value
                $Totals
              
              
              300,000
              
              
              468,421
              
              
              20,750
              
              
              576,271
              
              
              1,365,442
              
              
              —
  6. Convertible
        Debentures
  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
        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 (the “Convertible Debentures”),
        and a warrant 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
        Convertible Debentures are due and payable on June 10, 2007. The principal
        and
        accrued interest on the 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 its 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 a registration
        statement registering the resale of shares of the Company's common stock
        issuable upon conversion of the Convertible Debentures and exercise of the
        warrants.
  In
        accordance with EITF 98-5 *“Accounting
        for Convertible Securities with Beneficial Conversion Features or Contingently
        Adjustable Conversion Ratios”,* the
        Company recognized the value of the embedded beneficial conversion feature
        of
        $3,941,022 as additional paid in capital as the debt was issued with an
        intrinsic value conversion feature. In addition, in accordance with EITF
        00-27 *“Application
        of Issue No. 98-5 to Certain Convertible Instruments”,* the
        Company has allocated the proceeds of issuance between the convertible debt
        and
        the detachable warrants based on their relative fair values. Accordingly,
        the
        Company recognized the fair value of the detachable warrants of $2,058,978
        as
        additional paid in capital. The Company will record further interest expense
        over the term of the Convertible Debentures of $6,000,000 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 accrued to the face
        value of $6,000,000 to maturity. To October 31, 2005, accrued interest of
        $180,000 has been included in accrued liabilities, and interest expense of
        $1,125,000 has been accreted increasing the carrying value of the Convertible
        Debentures to $1,125,000.
  11
 Triangle
              Petroleum Corporation
 (formerly
              Peloton Resources Inc.)
 (An
              Exploration Stage Company)
 Notes
              to
              the Consolidated Financial Statements
 (Expressed
              in U.S. dollars)
 (Unaudited)
  7. Related
        Party Transactions
  a)
              During
                  the period ended October 31, 2005, the Company repaid $28,416 owing
                  to the
                  former President of the Company.
  b)
              Previously,
                  the former President of the Company provided consulting services
                  and
                  office premises to the Company. The services were valued at $250
                  per month
                  and office premises were valued at $100 per month. During the nine
                  month
                  period ended October 31, 2004, donated consulting services of $2,250
                  and
                  donated rent of $900 were recorded.
  c)
              The
                  Company paid the former Secretary of the Company $18,000 during
                  the nine
                  month period ended October 31, 2005 for consulting services provided.
                  Previously, the former Secretary provided consulting services to
                  the
                  Company valued at $250 per month. During the nine month period
                  ended
                  October 31, 2004, donated consulting services of $2,250 were
                  recorded.
  d)
              The
                  President of the Company provided consulting services to the Company
                  valued at $1,000 per month to August 31, 2005. During the nine
                  month
                  period ended October 31, 2005, donated consulting services of $3,000
                  were
                  recorded. Effective September 1, 2005, the Company agreed to pay
                  $10,700
                  per month for management services provided by the President of
                  the
                  Company. During the nine month period ended October 31, 2004, management
                  fees of $21,400 were incurred.
  e)
              On
                  June 23, 2005, the Company entered into a management consulting
                  agreement
                  with the President of the Company’s subsidiary. Under the terms of the
                  agreement, the Company must pay $20,000 per month for an initial
                  term of
                  two years, and, unless notice of termination is given by either
                  party, is
                  automatically renewed for one year periods. During the nine month
                  period
                  ended October 31, 2005, $100,000 was
                  incurred.
  f)
              During
                  the nine-month period ended October 31, 2005, the Company paid
                  a
                  director’s fee of $5,000 to a director of the
                  Company.
 
 8. Common
        Stock
  (a)
              On
                  May 9, 2005, the Company declared a stock dividend of six shares
                  of common
                  stock for each one share of common stock outstanding. All share
                  amounts
                  stated herein have been restated to reflect the stock
                  dividend.
  (b)
              On
                  May 12, 2005, the former President of the Company returned 34,300,000
                  shares of common stock to the Company for
                  cancellation.
  (c)
              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 stock was issued below fair value, a discount of $1,040,000
                  was
                  recognized. During the period ended October 31, 2005, $195,000
                  was charged
                  to operations and $845,000 is included in deferred
                  compensation.
  (d)
              On
                  June 2, 2005, the Company issued 4,000,000 shares of common stock
                  at $0.01
                  per share for cash proceeds of $40,000. On July 20, 2005, one investor
                  returned 2,000,000 shares of common stock and received back the
                  original
                  subscription amount of $20,000. As the stock was issued below fair
                  value,
                  a discount of $675,000 was recognized. During the period ended
                  October 31,
                  2005, $112,500 was charged to operations and $562,500 is included
                  in
                  deferred compensation.
  (e)
              On
                  September 22, 2005, the Company issued 300,000 shares of common
                  stock at a
                  fair value of $474,000 for investor relations services to be provided
                  over
                  a term of one year. At October 31, 2005, $296,250 is included in
                  deferred
                  compensation.
  12
 Triangle
              Petroleum Corporation
 (formerly
              Peloton Resources Inc.)
 (An
              Exploration Stage Company)
 Notes
              to
              the Consolidated Financial Statements
 (Expressed
              in U.S. dollars)
 (Unaudited)
 
 9. Stock
        Options
  Effective
        August 5, 2005, the Company approved an incentive stock option plan (the
“2005
        Plan”) to issue up to 2,000,000 shares of common stock. The 2005 Plan allows for
        the granting of share purchase 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. During the nine month period ended October 31, 2005,
        the
        Company granted stock options to acquire up to 1,580,000 shares of common
        stock
        exercisable at $3.23 per share on or before August 5, 2010, and 200,000 shares
        of common stock exercisable at $3.53 per share on or before October 20, 2010.
        During the three month period ended October 31, 2005, the Company recognized
        stock-based compensation of $1,100,281 which is included in management services.
        During the nine month period ended October 31, 2005, the Company recognized
        stock-based compensation of $1,193,406 which is included in management
        services.
  A
        summary
        of the Company’s stock option activity is as follows:
 
 Nine
                  months ended
                October
                  31, 2005
              
              Year
                  ended
                January
                  31, 2005Number
                  of
                Options
              
              Weighted
                Average
                ExercisePrice
              
              Number
                  of
                Options
              
              Weighted
                Average
                Exercise
                  PriceBalance,
                  beginning of period
              
              
              —
              
              $
              —
              
              
              —
              
              $
              —Granted
              
              
              1,780,000
              
              
              3.26
              
              
              —
              
              
              —Cancelled
                  / Forfeited
              
              
              —
              
              
              —
              
              
              —
              
              
              —Exercised
              
              
              —
              
              
              —
              
              
              —
              
              
              —Balance,
                  end of period
              
              
              1,780,000
              
              $
              3.26
              
              
              —
              
              $
              —
  As
        at
        October 31, 2005, the following options are outstanding:
  Weighted
                    Average Remaining Contractual
                    Life
                
                
                October
                    31, 2005Exercise
                    price
                
                
                (in
                    years)
                
                
                Outstanding
                
                
                Exercisable$3.23
                
                
                4.76
                
                
                1,580,000
                
                
                316,000$3.53
                
                
                4.97
                
                
                200,000
                
                
                50,0004.79
                
                
                1,780,000
                
                
                366,000
 
 
 10. Contingencies
        and Commitments
  a)
              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 $30,100 (CDN $36,816)
                  for
                  the first two years and $31,644 (CDN $38,704) for the remaining
                  two years.
                  The Company must also pay its share of occupancy costs, currently
                  at an
                  annual rate of $16,471 (CDN $20,145). Future minimum lease payments
                  over
                  the next five years are as follows:
  2006
              
              $
              16,0002007
              
              $
              47,0002008
              
              $
              47,0002009
              
              $
              48,0002010
              
              $
              32,000$
              190,000
  b)
              On
                  July 29, 2005, the Company received a letter from Golden Eagle
                  Energy Ltd.
                  (“Golden Eagle”), which accused the President of the Company’s Canadian
                  subsidiary of usurping a corporate opportunity presented to Golden
                  Eagle,
                  his former employer. The Company has retained counsel in this matter
                  and
                  has provided a response to Golden Eagle denying all their claims.
                  No
                  accruals have been made in these financial statements as management
                  does
                  not believe the claims have
                  merit.
  13
 Triangle
              Petroleum Corporation
 (formerly
              Peloton Resources Inc.)
 (An
              Exploration Stage Company)
 Notes
              to
              the Consolidated Financial Statements
 (Expressed
              in U.S. dollars)
 (Unaudited)
  10. Contingencies
        and Commitments (continued)
  c)
              The
                  Company entered into a Participation Agreement dated October 19,
                  2005 with
                  Kerogen Energy, Inc., 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.
  d)
              The
                  Company entered into a Letter Agreement dated October 28, 2005
                  with Hunter
                  Energy LLC to acquire a 25% working interest in three prospects
                  located in
                  Colorado, Wyoming and Montana. The Company is committed to pay
                  up to
                  $4,492,334, and must pay $1,000,000 by November 4, 2005 (paid)
                  and an
                  additional $1,000,000 by November 30, 2005 (paid). The Company
                  must pay
                  33.333% of the costs of drilling the first well, and 25% of the
                  costs
                  thereafter.
  11. Subsequent
        Event
  In
        December, 2005, the Company entered into a securities purchase agreement
        with a
        single accredited investor ( *the
        “Purchase Agreement”* )
        pursuant to which the investor agreed to purchase a 5% convertible debenture
        with a principal amount of up to $15,000,000. The convertible debenture is
        convertible into common stock at any time by dividing the dollar amount being
        converted by the lower of $5.00 (the “Fixed Price”) 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 10 trading days immediately preceding the conversion
        date. The Company has the right to redeem a portion of all amounts outstanding
        under the convertible debenture prior to the maturity date provided that
        the
        closing bid price of the Company’s common stock is less than the Fixed Price at
        the time of the redemption. The Company may redeem the convertible debenture
        by
        paying 120% of the invested amount together with any unpaid interest. As
        a
        condition of the Private Placement, the Company agreed to file a registration
        statement registering the shares of common stock (the "Registration Statement")
        issuable on conversion of the convertible debenture in order to receive all
        of
        the proceeds of the Private Placement. The convertible debenture will be
        due and
        payable in December, 2008.
  The
        gross
        proceeds of the Private Placement will be paid as follows:
  (i)
              $5,000,000
                  within two days of closing
                  (received);
  (ii)
              $5,000,000
                  on the second day prior to the filing date of the Registration
                  Statement;
                  and
  (iii)
              $5,000,000
                  on the fifth business day following the effective date of the Registration
                  Statement.
  There
        are
        no assurances that the Company's Registration Statement will become effective
        or
        that the Company will receive the last two payments.
  14
  **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 asses 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 eight months, during one of the strongest bull markets for
        oil and
        natural gas. The average monthly price for West Texas Intermediate (WTI)
        crude
        oil currently, compared to the prior year, is as follows:
 
 **Month
                  and Year**
              **Price
                  per barrel**
              **Month
                  and Year**
              **Price
                  per barrel**April
                  2005
              $53
              April
                  2004
              $36May
                  2005
              $49
              May
                  2004
              $40June
                  2005
              $57
              June
                  2004
              $38July
                  2005
              $59
              July
                  2004
              $40August
                  2005
              $65
              August
                  2004
              $44September
                  2005
              $66
              September
                  2004
              $46October
                  2005
              $62
              October
                  2004
              $53November
                  2005
              $58
              November
                  2004
              $48
 
 Regardless
        of which index is used, the trend for natural gas prices has generally followed
        the crude oil trend. All of these prices are significantly higher than at
        the
        same time last year and the forward contract prices for the winter months
        are
        higher than the August prices. 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 after Hurricane Katrina 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.
 
 Since
        our
        last quarterly report, we have undertaken the following major
        initiatives:
 
 ●
                Contracted
                    the services of an experienced geo science team, an experienced
                    landman
                    and hired a chief financial
                    officer;
 ●
                Participated in drilling our first deep basin
                  gas well in
                  northwestern Alberta;
 ●
                Secured a drilling rig for our winter 2005/2006
                  drilling
                  program;
 ●
              Reached
                  an agreement with Kerogen Resources Inc., (“Kerogen”) to pursue
                  opportunities relating to the Barnett Shale Project in the Greater
                  Fort
                  Worth area of East Texas;
 ●
                Reached
                    an agreement with Hunter Energy Exploration, Inc., (“Hunter Energy”) to
                    explore approximately 64,000 acres of mineral rights in three
                    prospect
                    areas in Colorado, Wyoming and
                    Montana;
 ●
                Participated in drilling our first well in the
                  United
                  States with Hunter Energy in Colorado;
 ●
                Participated in drilling our second deep basin
                  gas well
                  in northwestern Alberta; and
 ●
                Completed first stage of $15 million
                  funding.
 
 15
 **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
        hired as the President and director of our new 100% owned Alberta operating
        subsidiary, Elmworth Energy Corporation. Mr. Hietala’s specific mandate is to
        build a complete organization under his direction in Elmworth 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.
 
 Over
        the
        past few months, we have contracted or hired several significant additions
        to
        the operating team in Elmworth based upon Mr. Hietala’s contacts, including
        landmen, geologists, geophysicists and engineers. The first notable addition
        is
        Dr. Macomb T. Jervey, who has over 30 years of geological experience, a portion
        of which was as Exploration Vice President at Canadian Hunter Exploration
        Ltd.,
        and has completed 75 proprietary geological studies on areas in British
        Columbia, Alberta and Saskatchewan. We also 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. The final 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. The Elmworth
        geoscience team was complemented by the addition of an experienced landman,
        Mr.
        Neil McPherson. Mr. McPherson brings thirty-six years of land expertise to
        Elmworth. Upon graduation from the University of Calgary in 1969 with a B.A.,
        Mr. McPherson began his career in the land department of Mobil Oil Canada
        Ltd.
        He was actively involved in both surface and mineral land issues. Subsequent
        to
        this, he has held a variety of senior and executive positions with companies
        such as Sundance Oil Canada Ltd., Covenant Resources Ltd., Oakwood Petroleum,
        Morgan Hydrocarbons, Mannville Oil and Gas Ltd. and High Point Resources
        Inc.
 
 16
 In
        addition, we are actively seeking at least one more person to join our board
        of
        directors and several people to join our advisory board. 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 current quarter ended October 31, 2005, 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:
 
 *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.
 
 On
        October 13, 2005, Elmworth participated in a 2,500 meter (8,250 feet) Cretaceous
        drilling project in the Deep Basin of West Central Alberta. This first
        evaluation well will allow us to earn the right to drill in five additional
        sections of land (approximately 3,200 acres). The operator of the well is
        an
        experienced, Calgary-based company with strong capabilities in all phases
        of
        drilling, completion and production. Elmworth will be paying 38.5% of the
        costs.
        The drilling portion of this well attributable to Elmworth is expected to
        cost
        $425,000. Elmworth’s operating partner obtained this opportunity from a royalty
        trust company and offered the interest to Elmworth on equal terms to itself.
        It
        is Elmworth’s intent to pursue projects such as this in order to establish good
        working relationships and to acquire select land positions in the highly
        competitive Deep Basin area of Alberta. The intervals are interpreted to
        be gas
        bearing with deliverability being the key factor to commerciality. There
        is
        existing pipeline capacity in the area. Should the first location be successful,
        a near term follow up well is planned.
 
 *Barnett
        Shale Project - Greater Fort Worth Basin, 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 1.4 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 as the eighty plus active drilling
        rigs deliver new insights and understanding to the area operators. Triangle
        USA
        has entered into the Barnett Shale trend through a joint venture with Kerogen
        Resources Inc. (“Kerogen”) of Houston, Texas. Kerogen’s focus is to identify and
        exploit present and future shale gas projects within the United Sates and
        internationally. The team forming Kerogen has an excellent track record of
        finding large resource plays in Canada and the United States. 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). The acreage acquisition
        program will be followed by a focused 3-D seismic acquisition program and
        horizontal wells designed to quantify the Barnett Shale gas potential. Triangle
        USA believes the Barnett Shale trend to be a relatively low risk, repeatable
        opportunity that will continue to benefit from the application of new technology
        and sound field procedures. Triangle USA along with its joint venture partner,
        Kerogen, will also evaluate other shale gas projects outside of the Greater
        Fort
        Worth Basin.
  17
  *Hunter
        Energy Joint Venture Opportunity*
 
 On
        October 31, 2005 we executed a joint venture agreement with Hunter Energy
        of
        Denver Colorado. 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 have an exceptional track record of finding large oil and gas
        fields. The company is led by Mr. John Masters, the founder of Canadian Hunter
        Exploration Limited (“Canadian Hunter”). 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.
        Hunter has a team of 11 petroleum technology experts and 12 associated staff,
        several of whom were trained at Canadian Hunter. John Masters and his team
        have
        developed a number of large regional oil and gas projects in the Rocky Mountains
        of the United States. The detailed geological and subsurface interpretations
        completed by Hunter form the basis of a new exploration program. The business
        environment of the Rocky Mountain basins is attractive to establishing new
        projects. Land costs, drilling density and most importantly, hydrocarbon
        potential are all favorable in the areas selected by the experienced team
        at
        Hunter.
 
 **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 executing our operating plan over
        the
        next several months.
 
 In
        anticipation of the significant funds required to undertake the projects
        mentioned above and to acquire additional seismic data, acquire a land position,
        and launch a drilling program this winter, we anticipate that we will require
        approximately $25 million in additional funding. We have recently secured
        a $15
        million funding commitment from one institutional investor with gross proceeds
        received on the first closing of $5 million. On each of the second and third
        closings, we will receive another tranche of $5 million. The second closing
        will
        occur two business days prior to filing a registration statement registering
        the
        shares of common stock underlying the convertible debentures. We are
        contractually obligated to file the registration statement no later than
        January
        22, 2006, although we anticipate filing prior to that date. The third closing
        will occur within five days after the registration statement is declared
        effective by the Securities and Exchange Commission. We currently do not
        have
        any contracts or commitments for the remaining financing, and there can be
        no
        assurance that financing will be available in amounts or on terms acceptable
        to
        us, if at all.
 
 **Technology:**
 
 One
        of
        the keys to finding natural gas is the use of available resources and advanced
        technological methods. In June 2005, Elmworth acquired $576,000 of new, high
        quality three dimensional seismic data covering 30 square miles in northwestern
        Alberta. This initial seismic data is currently being interpreted by the
        experienced team of geologists and geophysicists. We anticipate that this
        review
        will be finalized during the first fiscal quarter of 2006. **** The
        initial objective here is to identify preliminary locations to target within
        the
        selected area. The acquired seismic will be used to establish opportunities
        in
        this multi-horizon area.
 
 Over
        the
        winter months, we anticipate making additional seismic purchases in order
        to
        continue the interpretation and drilling location selection process. This
        front-end process normally takes from six to twenty-four months; however
        Elmworth is attempting to complete this initial phase in a shorter period
        in
        order to prepare for this winter’s drilling season, which typically lasts from
        December to March. The experienced land and geoscience team, along with Mr.
        Hietala’s familiarity with the Deep Basin are critical to speeding up this
        process.
 
 18
 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.
 
 Once
        the
        specific drilling locations have been identified, Elmworth will utilize the
        latest drilling and well completion techniques in order to maximize production
        from each location. The hiring of technical specialists and qualified consulting
        firms to assist Elmworth during the winter drilling program in February and
        March 2006 will be essential to establishing production.
  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 via joint venture farm-ins.
 
 **Drilling
        capability:**
 
 On
        October 24, 2005, Elmworth executed a letter of intent with a Calgary, Alberta
        based drilling contractor to secure a drilling rig for Elmworth’s Canadian
        winter 2005/2006 program. The 3,000 meter rig will be located in the south
        Grande Prairie Area. 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**
 
 *November
        2005 to January 2006:*
 
 ●  Continue
        to hire qualified personnel and consultants.
 ●  Continue
        acquiring, processing and interpreting seismic in targeted areas.
 ●  Identify
        specific drilling locations and apply for well permits.
 ●  Secure
        additional funding from equity and debt sources.
 ●  Acquire
        initial land positions through crown lease sales/joint ventures.
 ●  Prepare
        drilling sites for winter drilling program.
 
 19
 *February
          2006 to April 2006:*
 
 ·
                Add
                    production based personnel and/or
                    consultants.
 ·
                Continue
                    winter drilling program in Canada and the United
                    States.
 ·
                Seek
                    additional sources of equity
                    capital.
 ·
                Continue
                    adding to land position via crown sales/joint
                    ventures.
 ·
                Acquire
                    initial land position in Barnett Shale project.
 
 *May
          2006 to July 2006:*
 
 ·
                Commence
                    work on completing wells drilled during the
                    winter.
 ·
                Commence
                    spring/summer drilling in the Hunter Energy
                    project.
 ·
                Continue
                    to increase land position in Canada and the United
                    States.
 ·
                Commence
                    a seismic program on the Barnett Shale Project on acquired
                    land.
 *August
        2006 to October 2006:*
 ·
                Continue
                    to increase land position in Canada and the United
                    States.
 ·
                Commence
                    drilling on lands in Barnett Shale
                    Project.
 ·
                Continue
                    drilling in the Hunter Energy
                    Project.
 ·
                Continue
                    completion work on wells previously
                    drilled.
 .
 **Liquidity
        and Capital Resources**
 
 As
        of
        October 31, 2005, we had working capital of $4,151,389, resulting primarily
        from
        our cash and cash equivalents of $4,249,511 at quarter end. For the nine
        months
        ended October 31, 2005, we generated a net cash flow deficit from operating
        activities of $483,239. Cash used in investing activities totaled $1,410,352,
        which was primarily utilized for Elmworth’s share of costs relating to the
        drilling of the first Alberta deep basin gas well and the initial payment
        to
        Kerogen Resources to participate in the Barnett Shale Project joint venture.
        Cash provided by financing activities totaled $5,995,000 from the sale of
        convertible debentures.
 
 We
        expect
        significant capital expenditures during the next 12 months, contingent upon
        raising capital. These anticipated expenditures are 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 a few months, but not for 12 months or more. There can be no assurance
        that
        financing will be available in amounts or on terms acceptable to us, if at
        all.
 
 By
        adjusting our operations and development to the level of capitalization,
        we
        believe we have sufficient capital resources to meet projected cash flow
        deficits. However, if during that period or thereafter, we are not successful
        in
        generating sufficient liquidity from operations or in raising sufficient
        capital
        resources, on terms acceptable to us, this could have a material adverse
        effect
        on our business, results of operations liquidity and financial
        condition.
 
 We
        presently do not have any available credit, bank financing or other external
        sources of liquidity. Due to our brief history and historical operating losses,
        our operations have not been a source of liquidity. We will need to obtain
        additional capital in order to expand operations and become profitable. In
        order
        to obtain capital, we may need to sell additional shares of our common stock
        or
        borrow funds from private lenders. There can be no assurance that we will
        be
        successful in obtaining additional funding.
 
 We
        will
        still need additional investments in order to continue operations to cash
        flow
        break even. 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.
 
 20
 To
        date,
        we have generated minimal revenues and have incurred operating losses in
        every
        quarter. Our registered independent certified public accountants have stated
        in
        their report dated April 27, 2005, that we are an early exploration company
        and
        have not generated revenues. 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.
 
 Since
        the
        conversion price of the convertible debenture was less than the market price
        of
        the common stock at the time the convertible debentures were issued, we
        recognized a a charge of $1,125,000 relating to the beneficial conversion
        feature of the $6,000,000 of convertible debentures issued during the second
        quarter.
 
 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.
 
 On
        December 8, 2005, we entered into a Securities Purchase Agreement (the “Purchase
        Agreement”) with Cornell Capital Partners L.P. (“Cornell”) providing for the
        sale by us to Cornell of our 5% secured convertible debentures in the aggregate
        principal amount of $15,000,000 (the “Debentures”) of which $5,000,000 was
        advanced immediately. The second installment of $5,000,000 will be advanced
        immediately prior to our filing of the Registration Statement (as defined
        below)
        with the Securities and Exchange Commission (the “Commission”). The last
        installment of $5,000,000 will be advanced within five days after the
        Registration Statement is declared effective by the Commission.
 
 The
        Debentures mature on the third anniversary of the date of issuance (the
“Maturity Date”) and bear interest at the annual rate of 5%. We are not required
        to make any payments until the Maturity Date.
 
 Holders
        may convert, at any time, any amount outstanding under the Debentures into
        shares of our common stock (the “Common Stock”) 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 10 trading days immediately preceding the date of
        conversion.
 
 At
        our
        option, we have the right, with three business days advance written notice,
        to
        redeem a portion or all amounts outstanding under the Debenture 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 a redemption, we
        are
        obligated to pay an amount equal to the principal amount being redeemed plus
        a
        20% redemption premium, and accrued interest.
 
 21
 In
        connection with the Purchase Agreement, we also entered into a registration
        rights agreement (the “Registration Rights Agreement”) providing for the filing
        of a registration statement (the “Registration Statement”) with the Securities
        and Exchange Commission registering the Common Stock issuable upon conversion
        of
        the Debentures. We are 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 Debentures have been
        sold. In the event of a default of our obligations under the Registration
        Rights
        Agreement, including our agreement to file the Registration Statement with
        the
        Securities and Exchange Commission no later than January 22, 2006, or 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 Debentures.
 
 The
        investor has agreed to restrict its ability to convert the Debenture and
        receive
        shares of our 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 4.9% of the then issued and outstanding shares of our common
        stock.
 
 In
        connection with the Securities Purchase Agreement, we and each of our
        subsidiaries executed security agreements (the “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 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.
 
 **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, exploration
        and
        development 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 October 31, 2005, 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. If the future
        exploration of unproved properties is determined uneconomical, the amounts
        of
        such properties are added to the capitalized cost to be amortized. As of
        October
        31, 2005, all of our oil and gas properties were unproved and were excluded
        from
        amortization.
  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. Occasional transactions
        occur
        in Canadian currency, and we have 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.
 
 22
 
 **RISK
        FACTORS**
 
 Much
        of
        the information included in this quarterly report includes or is based upon
        estimates, projections or other "forward-looking statements". Such
        forward-looking statements include any projections or estimates made by us
        and
        our management in connection with our business operations. While these
        forward-looking statements, and any assumptions upon which they are based,
        are
        made in good faith and reflect our current judgment regarding the direction
        of
        our business, actual results will almost always vary, sometimes materially,
        from
        any estimates, predictions, projections, assumptions or other future performance
        suggested herein.
 
 Such
        estimates, projections or other "forward-looking statements" involve various
        risks and uncertainties as outlined below. We caution the reader that important
        factors in some cases have affected and, in the future, could materially
        affect
        actual results and cause actual results to differ materially from the results
        expressed in any such estimates, projections or other "forward-looking
        statements".
  Our
        common shares are considered speculative. Prospective investors should consider
        carefully the risk factors set out below.
 
 **We
        Have a History Of Losses Which May Continue, Which May Negatively Impact
        Our
        Ability to Achieve Our Business Objectives.**
 
 We
        incurred net losses of $ 31,444 for the
        year ended January 31, 2005 and $ 16,237 for the
        year ended January 31, 2004. For the nine months ended October 31, 2005,
        we
        incurred a net loss of $3,057,735. We cannot assure you that we can achieve
        or
        sustain profitability on a quarterly or annual basis in the future. Our
        operations are subject to the risks and competition inherent in the
        establishment of a business enterprise. There can be no assurance that future
        operations will be profitable. Revenues and profits, if any, will depend
        upon
        various factors, including whether we will be able to continue expansion
        of our
        revenue. We may not achieve our business objectives and the failure to achieve
        such goals would have an adverse impact on us.
 
 **If
        We Are Unable to Obtain Additional Funding Our Business Operations Will be
        Harmed and If We Do Obtain Additional Financing Our Then Existing Shareholders
        May Suffer Substantial Dilution.**
 
 We
        will
        require additional funds to sustain and expand our oil and gas exploration
        activities. We anticipate that we will require up to approximately $25,000,000
        to fund our continued and planned operations for the next twelve months,
        depending on revenue from operations. Additional capital will be required
        to
        effectively support the operations and to otherwise implement our overall
        business strategy. There can be no assurance that financing will be available
        in
        amounts or on terms acceptable to us, if at all. The inability to obtain
        additional capital will restrict our ability to grow and may reduce our ability
        to continue to conduct business operations. If we are unable to obtain
        additional financing, we will likely be required to curtail our marketing
        and
        exploration plans and possibly cease our operations. Any additional equity
        financing may involve substantial dilution to our then existing
        shareholders.
 
 **Our
        Independent Auditors Have Expressed Substantial Doubt About Our Ability to
        Continue As a Going Concern, Which May Hinder Our Ability to Obtain Future
        Financing.**
 
 In
        their
        report dated April 27, 2005, our independent auditors stated that our financial
        statements for the year ended January 31, 2005 were prepared assuming that
        we
        would continue as a going concern. Our ability to continue as a going concern
        is
        an issue raised as a result of recurring losses from operations and working
        capital deficiency. We continue to experience net operating losses. Our ability
        to continue as a going concern is subject to our ability to generate a profit
        and/or obtain necessary funding from outside sources, including obtaining
        additional funding from the sale of our securities, increasing sales or
        obtaining loans and grants from various financial institutions where possible.
        Our continued net operating losses increase the difficulty in meeting such
        goals
        and there can be no assurances that such methods will prove successful.
  23
  **We
        Have a Limited Operating History and if We are not Successful in Continuing
        to
        Grow Our Business, Then We may have to Scale Back or Even Cease Our Ongoing
        Business Operations.**
 
 We
        have
        no history of revenues from operations and have no significant tangible assets.
        We have yet to generate positive earnings and there can be no assurance that
        we
        will ever operate profitably. Our company has a limited operating history
        and
        must be considered in the development stage. Our success is significantly
        dependent on a successful acquisition, drilling, completion and production
        program. Our operations will be subject to all the risks inherent in the
        establishment of a developing enterprise and the uncertainties arising from
        the
        absence of a significant operating history. We may be unable to locate
        recoverable reserves or operate on a profitable basis. We are in the development
        stage and potential investors should be aware of the difficulties normally
        encountered by enterprises in the development stage. If our business plan
        is not
        successful, and we are not able to operate profitably, investors may lose
        some
        or all of their investment in our company.
 
 **Because
        We Are Small and Do Not Have Much Capital, We May Have to Limit our Exploration
        Activity Which May Result in a Loss of Your Investment.**
 
 Because
        we are small and do not have much capital, we must limit our exploration
        activity. As such we may not be able to complete an exploration program that
        is
        as thorough as we would like. In that event, existing reserves may go
        undiscovered. Without finding reserves, we cannot generate revenues and you
        will
        lose your investment.
 
 **If
        We Are Unable to Retain the Services of Messrs. Gustafson and Hietala or
        If We
        Are Unable to Successfully Recruit Qualified Managerial and Field Personnel
        Having Experience in Oil and Gas Exploration, We May Not Be Able to Continue
        Our
        Operations.**
 
 Our
        success depends to a significant extent upon the continued service of Mr.
        Mark
        Gustafson, our Chief Executive Officer, President, and a director and Mr.
        Ron
        Hietala, a director and President of Elmworth Energy Corporation. Loss of
        the
        services of Messrs. Gustafson or Hietala could have a material adverse effect
        on
        our growth, revenues, and prospective business. We do not maintain key-man
        insurance on the life of Messrs. Gustafson or Hietala. In addition, in order
        to
        successfully implement and manage our business plan, we will be dependent
        upon,
        among other things, successfully recruiting qualified managerial and field
        personnel having experience in the oil and gas exploration business. Competition
        for qualified individuals is intense. There can be no assurance that we will
        be
        able to find, attract and retain existing employees or that we will be able
        to
        find, attract and retain qualified personnel on acceptable terms.
 
 **As
        Our Properties are in the Exploration and Development Stage, There Can be
        no
        Assurance That We Will Establish Commercial Discoveries on Our Properties.**
 
 Exploration
        for economic reserves of oil and gas is subject to a number of risk factors.
        Few
        properties that are explored are ultimately developed into producing oil
        and/or
        gas wells. Our properties are in the exploration and development stage only
        and
        are without proven reserves of oil and gas. We may not establish commercial
        discoveries on any of our properties.
 
 **The
        Potential Profitability of Oil and Gas Ventures Depends Upon Factors Beyond
        the
        Control of Our Company.**
 
 The
        potential profitability of oil and gas properties is dependent upon many
        factors
        beyond our control. For instance, world prices and markets for oil and gas
        are
        unpredictable, highly volatile, potentially subject to governmental fixing,
        pegging, controls, or any combination of these and other factors, and respond
        to
        changes in domestic, international, political, social, and economic
        environments. Additionally, due to worldwide economic uncertainty, the
        availability and cost of funds for production and other expenses have become
        increasingly difficult, if not impossible, to project. These changes and
        events
        may materially affect our financial performance.
 
 Adverse
        weather conditions can also hinder drilling operations. A productive well
        may
        become uneconomic in the event water or other deleterious substances are
        encountered which impair or prevent the production of oil and/or gas from
        the
        well. In addition, production from any well may be unmarketable if it is
        impregnated with water or other deleterious substances. The marketability
        of oil
        and gas which may be acquired or discovered will be affected by numerous
        factors
        beyond our control. These factors include the proximity and capacity of oil
        and
        gas pipelines and processing equipment, market fluctuations of prices, taxes,
        royalties, land tenure, allowable production and environmental protection.
        These
        factors cannot be accurately predicted and the combination of these factors
        may
        result in our company not receiving an adequate return on invested capital.
 
 24
 **Competition
        In The Oil And Gas Industry Is Highly Competitive And There Is No Assurance
        That
        We Will Be Successful In Acquiring The Leases.**
 
 The
        oil
        and gas industry is intensely competitive. We compete with numerous individuals
        and companies, including many major oil and gas companies, which have
        substantially greater technical, financial and operational resources and
        staffs.
        Accordingly, there is a high degree of competition for desirable oil and
        gas
        leases, suitable properties for drilling operations and necessary drilling
        equipment, as well as for access to funds. We cannot predict if the necessary
        funds can be raised or that any projected work will be completed.
 
 **Our
        Management Competes Against Us In The Oil And Gas
        Industry.**
 
 In
        addition to their positions with our company, our management currently engages,
        and intends to engage in the future, in the oil and gas business independently
        of us. As a result, conflicts of interest between us and management of our
        company might arise.
 
 **The
        Marketability of Natural Resources Will be Affected by Numerous Factors Beyond
        Our Control Which May Result in Us not Receiving an Adequate Return on Invested
        Capital to be Profitable or Viable.**
 
 The
        marketability of natural resources which may be acquired or discovered by
        us
        will be affected by numerous factors beyond our control. These factors include
        market fluctuations in oil and gas pricing and demand, the proximity and
        capacity of natural resource markets and processing equipment, governmental
        regulations, land tenure, land use, regulation concerning the importing and
        exporting of oil and gas and environmental protection regulations. The exact
        effect of these factors cannot be accurately predicted, but the combination
        of
        these factors may result in us not receiving an adequate return on invested
        capital to be profitable or viable.
 
 **Oil
        and Gas Operations are Subject to Comprehensive Regulation Which May Cause
        Substantial Delays or Require Capital Outlays in Excess of Those Anticipated
        Causing an Adverse Effect on Our Company.**
 
 Oil
        and
        gas operations are subject to federal, state, and local laws relating to
        the
        protection of the environment, including laws regulating removal of natural
        resources from the ground and the discharge of materials into the environment.
        Oil and gas operations are also subject to federal, state, and local laws
        and
        regulations which seek to maintain health and safety standards by regulating
        the
        design and use of drilling methods and equipment. Various permits from
        government bodies are required for drilling operations to be conducted; no
        assurance can be given that such permits will be received. Environmental
        standards imposed by federal, provincial, or local authorities may be changed
        and any such changes may have material adverse effects on our activities.
        Moreover, compliance with such laws may cause substantial delays or require
        capital outlays in excess of those anticipated, thus causing an adverse effect
        on us. Additionally, we may be subject to liability for pollution or other
        environmental damages which it may elect not to insure against due to
        prohibitive premium costs and other reasons. To date we have not been required
        to spend any material amount on compliance with environmental regulations.
        However, we may be required to do so in future and this may affect our ability
        to expand or maintain our operations.
 
 **Exploration
        and Production Activities are Subject to Certain Environmental Regulations
        Which
        May Prevent or Delay the Commencement or Continuance of Our Operations.**
 
 In
        general, our exploration and production activities are subject to certain
        federal, state and local laws and regulations relating to environmental quality
        and pollution control. Such laws and regulations increase the costs of these
        activities and may prevent or delay the commencement or continuance of a
        given
        operation. Compliance with these laws and regulations has not had a material
        effect on our operations or financial condition to date. Specifically, we
        are
        subject to legislation regarding emissions into the environment, water
        discharges and storage and disposition of hazardous wastes. In addition,
        legislation has been enacted which requires well and facility sites to be
        abandoned and reclaimed to the satisfaction of state authorities. However,
        such
        laws and regulations are frequently changed and we are unable to predict
        the
        ultimate cost of compliance. Generally, environmental requirements do not
        appear
        to affect us any differently or to any greater or lesser extent than other
        companies in the industry.
 
 25
 We
        believe that our operations comply, in all material respects, with all
        applicable environmental regulations. Our operating partners maintain insurance
        coverage customary to the industry; however, we are not fully insured against
        all possible environmental risks.
 
 **Exploratory
        Drilling Involves Many Risks and We May Become Liable for Pollution or Other
        Liabilities Which May Have an Adverse Effect on Our Financial Position.**
 
 Drilling
        operations generally involve a high degree of risk. Hazards such as unusual
        or
        unexpected geological formations, power outages, labor disruptions, blow-outs,
        sour gas leakage, fire, inability to obtain suitable or adequate machinery,
        equipment or labor, and other risks are involved. We may become subject to
        liability for pollution or hazards against which it cannot adequately insure
        or
        which it may elect not to insure. Incurring any such liability may have a
        material adverse effect on our financial position and operations.
 
 **Any
        Change to Government Regulation/Administrative Practices May Have a Negative
        Impact on Our Ability to Operate and Our Profitability.**
 
 The
        laws,
        regulations, policies or current administrative practices of any government
        body, organization or regulatory agency in the United States or any other
        jurisdiction, may be changed, applied or interpreted in a manner which will
        fundamentally alter the ability of our company to carry on our business.
 
 The
        actions, policies or regulations, or changes thereto, of any government body
        or
        regulatory agency, or other special interest groups, may have a detrimental
        effect on us. Any or all of these situations may have a negative impact on
        our
        ability to operate and/or our profitably.
  **Risks
        Relating to Our Common Stock** **:**
 
 **There
        Are a Large Number of Shares Underlying Our Convertible Debentures and Warrants
        That May be Available for Future Sale and the Sale of These Shares May Depress
        the Market Price of Our Common Stock.**
 
 As
        of
        December 12, 2005, we had 18,282,530 shares of common stock issued and
        outstanding, convertible debentures issued in June and July 2005 outstanding
        that may be converted into 6,000,000 shares of common stock, outstanding
        warrants issued in June and July 2005 to purchase 6,000,000 shares of common
        stock and convertible debentures issued in December 2005 outstanding that
        may be
        converted into 1,000,000 shares of common stock. All of the shares issuable
        upon
        conversion of the convertible debentures and upon exercise of our warrants
        issued in June and July 2005, may be sold without restriction. The sale of
        these
        shares may adversely affect the market price of our common stock.
 
 **If
        We Fail to Remain Current in Our Reporting Requirements, We Could be Removed
        From the OTC Bulletin Board Which Would Limit the Ability of Broker-Dealers
        to
        Sell Our Securities and the Ability of Stockholders to Sell Their Securities
        in
        the Secondary Market.**
 
 Companies
        trading on the OTC Bulletin Board, such as us, must be reporting issuers
        under
        Section 12 of the Securities Exchange Act of 1934, as amended, and must be
        current in their reports under Section 13, in order to maintain price quotation
        privileges on the OTC Bulletin Board. If we fail to remain current on our
        reporting requirements, we could be removed from the OTC Bulletin Board.
        As a
        result, the market liquidity for our securities could be severely adversely
        affected by limiting the ability of broker-dealers to sell our securities
        and
        the ability of stockholders to sell their securities in the secondary
        market.
  26
  **ITEM
        3. CONTROLS AND PROCEDURES**
 
 a)
              *Evaluation
                  of Disclosure Controls and Procedures:*As
                  of October 31, 2005, our management carried out an evaluation,
                  under the
                  supervision of our Chief Executive Officer and Chief Financial
                  Officer of
                  the effectiveness of the design and operation of our system of
                  disclosure
                  controls and procedures pursuant to the Securities and Exchange
                  Act, Rule
                  13a-15(e) and 15d-15(e) under the Exchange Act).  Based
                  on that
                  evaluation, our chief executive officer and chief financial officer
                  concluded that our disclosure controls and procedures 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 controls:*There were no changes in internal controls over financial reporting
                  that
                  occurred during the period covered by this report that have materially
                  affected, or are reasonably likely to materially effect, our internal
                  control over financial reporting.
 
 
  27
  **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. Except as disclosed below,
        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.
 
 On
        July
        29, 2005, we received a letter from counsel for Golden Eagle Energy Ltd.
        which
        accused Ron Hietala, the President of our Elmworth subsidiary, of usurping
        a
        corporate opportunity presented to Golden Eagle Energy, at which Mr. Hietala
        worked prior to his employment with us. We have retained counsel in this
        matter
        and our counsel has provided a response to Golden Eagle Energy denying all
        their
        claims.
 
 **Item
        2. Unregistered Sales of Equity Securities and Use of
        Proceeds.**
 
 On
        September 22, 2005, we issued 300,000 shares of common stock at a fair value
        of
        $474,000 for investor relations services to be provided over a term of one
        year.
        Such issuance was considered exempt from registration by reason of Section
        4(2)
        of the Securities Act of 1933.
 
 **Item
        3. Defaults Upon Senior Securities.**
 
 None.
  **Item
        4. Submission of Matters to a Vote of Security Holders.**
 
 None.
  **Item
        5. Other Information.**
 
 None.
  **Item
        6. Exhibits**
 
 31.1
              Certification
                  of Chief Executive Officer pursuant to Rule 13a-14 and Rule 15d-14(a),
                  promulgated under the Securities and Exchange Act of 1934, as
                  amended
 
 31.2
              Certification
                  of Chief Financial Officer pursuant to Rule 13a-14 and Rule 15d
                  14(a),
                  promulgated under the Securities and Exchange Act of 1934, as
                  amended
 
 32.1
              Certification
                  pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
                  906 of
                  the Sarbanes-Oxley Act of 2002 (Chief Executive
                  Officer)
 
 32.2
              Certification
                  pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
                  906 of
                  the Sarbanes-Oxley Act of 2002 (Chief Financial
                  Officer)
 
 28
  **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:
                  December 15, 2005
              By:**/s/
                  MARK GUSTAFSONMark
                  GustafsonPresident
                  (Principal Executive Officer)Date:
                  December 15, 2005
              By:**/s/
                  ALY MUSANIAly
                  MusaniChief
                  Financial Officer (Principal Financial Officer
                and
                  Principal Accounting Officer)
  
   29