----

----

| Nevada                                                         |   | 20-0237026                           |
|----------------------------------------------------------------|--------|--------------------------------------|
| (State or other jurisdiction of incorporation or organization) |   | (I.R.S. Employer Identification No.) |

| 2549 West Main Street, Suite 202, Littleton, Colorado |   | 80120      |
|-------------------------------------------------------|--------|------------|
| (Address of principal executive offices)              |   | (Zip Code) |

| (303) 798-5235                                             |
|------------------------------------------------------------|
| (Registrant’s telephone number, including area code) |

| Large accelerated filer  ̈ | Accelerated filer  ̈    |
|--------------------------------|-----------------------------|
|                           |                        |
| Non-accelerated filer  ̈   | Smaller reporting company x |

----

| A Note About Forward Looking Statements                                                                                                              | 1      |
|------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                                 |   |
| PART I - FINANCIAL INFORMATION                                                                                                                       |   |
|                                                                                                                                                 |   |
| Item 1 – Condensed Consolidated Financial Statements (Unaudited)                                                                               | 2      |
|                                                                                                                                                 |   |
| Condensed Consolidated Balance Sheets as of June 30, 2011 (Unaudited) and December 31, 2010                                                          | F-2    |
|                                                                                                                                                 |   |
| Condensed Consolidated Statements of Operations For Each of the Three-Month and Six-Month Periods Ended June 30, 2011 and 2010 (Unaudited)           | F-3    |
|                                                                                                                                                 |   |
| Condensed Consolidated Statements of Comprehensive Income For Each of the Three-Month and Six-Month Periods Ended June 30, 2011 and 2010 (Unaudited) | F-4    |
|                                                                                                                                                 |   |
| Condensed Consolidated Statements of Cash Flows For Each of the Six-Month Periods Ended June 30, 2011 and 2010 (Unaudited)                           | F-5    |
|                                                                                                                                                 |   |
| Notes to the Condensed Consolidated Financial Statements (Unaudited)                                                                                 | F-7    |
|                                                                                                                                                 |   |
| Item 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations                                                 | 3      |
|                                                                                                                                                 |   |
| Item 4 - Controls and Procedures                                                                                                                     | 10     |
|                                                                                                                                                 |   |
| PART II - OTHER INFORMATION                                                                                                                          |   |
|                                                                                                                                                 |   |
| Item 6 – Exhibits                                                                                                                              | 11     |
|                                                                                                                                                 |   |
| Signatures                                                                                                                                           | 13     |

----

----

----

| Condensed Consolidated Financial Statements of Eternal Energy Corp.:                                                                         |   |
|----------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                         |   |
| Condensed Consolidated Balance Sheets as of June 30, 2011 (Unaudited) and December 31, 2010                                                  | F-2    |
|                                                                                                                                         |   |
| Condensed Consolidated Statements of Operations for the Three-Month and Six-Month Periods Ended June 30, 2011 and 2010 (Unaudited)           | F-3    |
|                                                                                                                                         |   |
| Condensed Consolidated Statements of Comprehensive Income for the Three-Month and Six-Month Periods Ended June 30, 2011 and 2010 (Unaudited) | F-4    |
|                                                                                                                                         |   |
| Condensed Consolidated Statements of Cash Flows for the Six-Month Periods Ended June 30, 2011 and 2010 (Unaudited)                           | F-5    |
|                                                                                                                                         |   |
| Notes to the Condensed Consolidated Financial Statements (Unaudited)                                                                         | F-7    |

----

|                                                                                                                          |   | June 30, |       |   |              |   |
|-------------------------------------------------------------------------------------------------------------------------------|--------|---------------|------------|--------|-------------------|--------|
|                                                                                                                          |   | 2011          |       |   | December 31, |   |
|                                                                                                                          |   | (Unaudited)   |       |   | 2010              |   |
| Current assets:                                                                                                               |   |          |       |   |              |   |
| Cash                                                                                                                          |   | $             | 5,423,192  |   |              | $      | 2,400,362 |   |
| Trade receivables                                                                                                             |   |          | 614,021    |   |              |   | 248,461 |   |
| Receivable from American Eagle Energy Inc.                                                                                    |   |          | 667,333    |   |              |   | 279,376 |   |
| Prepaid expenses                                                                                                              |   |          | 6,034      |   |              |   | 30,106 |   |
|                                                                                                                          |   |          |       |   |              |   |   |   |
| Total current assets                                                                                                          |   |          | 6,710,580  |   |              |   | 2,958,305 |   |
|                                                                                                                          |   |          |       |   |              |   |   |   |
| Equipment and leasehold improvements, net of accumulated depreciation and amortization of $153,547 and $149,142, respectively |   |          | 16,598     |   |              |   | 20,693 |   |
| Oil and gas properties – subject to amortization, net of accumulated depletion of $129,062 and $104,350, respectively   |   |          | 1,835,564  |   |              |   | 340,321 |   |
| Oil and gas properties – not subject to amortization                                                                    |   |          | 460,207    |   |              |   | 590,368 |   |
| Marketable securities                                                                                                         |   |          | 1,161,199  |   |              |   | 1,117,716 |   |
| Marketable securities - related party                                                                                         |   |          | 127,426    |   |              |   | 197,453 |   |
|                                                                                                                          |   |          |       |   |              |   |   |   |
| Deposits                                                                                                                      |   |          | 5,345      |   |              |   | 5,345 |   |
|                                                                                                                          |   |          |       |   |              |   |   |   |
| Total assets                                                                                                                  |   | $             | 10,316,919 |   |              | $      | 5,230,201 |   |
|                                                                                                                          |   |          |       |   |              |   |   |   |
| Current liabilities:                                                                                                          |   |          |       |   |              |   |   |   |
| Accounts payable and accrued liabilities                                                                                      |   | $             | 2,404,230  |   |              | $      | 430,699 |   |
| Due to Passport Energy Ltd.                                                                                                   |   |          | 788,748    |   |              |   | - |   |
|                                                                                                                          |   |          |       |   |              |   |   |   |
| Total current liabilities                                                                                                     |   |          | 3,192,978  |   |              |   | 430,699 |   |
|                                                                                                                          |   |          |       |   |              |   |   |   |
| Long-term asset retirement obligation, net of discount of $44,090 and $23,647, respectively                                   |   |          | 16,473     |   |              |   | 13,853 |   |
| Total liabilities                                                                                                             |   |          | 3,209,451  |   |              |   | 444,552 |   |
|                                                                                                                          |   |          |       |   |              |   |   |   |
| Commitments and contingencies (Note 8)                                                                                        |   |          | -          |   |              |   | - |   |
|                                                                                                                          |   |          |       |   |              |   |   |   |
| Stockholders’ equity:                                                                                                   |   |          |       |   |              |   |   |   |
| Common stock, $.001 par value, 875,000,000 shares authorized, 41,005,822 shares outstanding                                   |   |          | 41,006     |   |              |   | 41,006 |   |
| Additional paid-in capital                                                                                                    |   |          | 9,199,305  |   |              |   | 9,199,305 |   |
| Accumulated unrealized gains on marketable securities                                                                         |   |          | 388,919    |   |              |   | 415,463 |   |
| Accumulated deficit                                                                                                           |   |          | (2,521,762 | )      |              |   | (4,870,125 | ) |
|                                                                                                                          |   |          |       |   |              |   |   |   |
| Total stockholders’ equity                                                                                              |   |          | 7.107.468  |   |              |   | 4,785,649 |   |
|                                                                                                                          |   |          |       |   |              |   |   |   |
| Total liabilities and stockholders’ equity                                                                              |   | $             | 10,316,919 |   |              | $      | 5,230,201 |   |

----

----

|                                                                                     |   | For the Three-Month Period |       |   | For the Six-Month Period |   |
|------------------------------------------------------------------------------------------|--------|----------------------------|------------|--------|--------------------------|--------|
|                                                                                     |   | Ended June 30,             |       |   | Ended June 30,           |   |
|                                                                                     |   | 2011                       |       |   | 2010                     |   |   | 2011 |   |   | 2010 |   |
| Oil and gas revenues                                                                     |   | $                          | 13,702     |   |                     | $      | 2,999 |   |   | $ | 52,805 |   |   | $ | 74,485 |   |
| Gain on sale of oil and gas properties — subject to amortization, net of costs     |   |                       | -          |   |                     |   | 509,934 |   |   |   | - |   |   |   | 509,934 |   |
| Gain on sale of oil and gas properties — not subject to amortization, net of costs |   |                       | 3,402,000  |   |                     |   | 4,735,253 |   |   |   | 3,402,000 |   |   |   | 4,735,253 |   |
|                                                                                     |   |                       |       |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Total revenue                                                                            |   |                       | 3,415,702  |   |                     |   | 5,248,186 |   |   |   | 3,454,805 |   |   |   | 5,319,672 |   |
|                                                                                     |   |                       |       |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Operating expenses:                                                                      |   |                       |       |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Oil and gas operating expenses                                                           |   |                       | 67,508     |   |                     |   | - |   |   |   | 115,691 |   |   |   | - |   |
| General and administrative                                                               |   |                       | 205,653    |   |                     |   | 218,150 |   |   |   | 344,906 |   |   |   | 452,402 |   |
| Professional fees                                                                        |   |                       | 232,425    |   |                     |   | 84,021 |   |   |   | 649,154 |   |   |   | 238,426 |   |
| Depreciation, amortization and depletion expense                                         |   |                       | 13,558     |   |                     |   | 11,801 |   |   |   | 29,117 |   |   |   | 28,060 |   |
|                                                                                     |   |                       |       |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Total operating costs                                                                    |   |                       | 519,144    |   |                     |   | 313,972 |   |   |   | 1,138,868 |   |   |   | 718,888 |   |
|                                                                                     |   |                       |       |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Total operating income                                                                   |   |                       | 2,896,558  |   |                     |   | 4,934,214 |   |   |   | 2,315,937 |   |   |   | 4,600,784 |   |
|                                                                                     |   |                       |       |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Interest income                                                                          |   |                       | 1,662      |   |                     |   | 2,677 |   |   |   | 3,030 |   |   |   | 4,372 |   |
| Dividend income                                                                          |   |                       | 19,476     |   |                     |   | - |   |   |   | 34,532 |   |   |   | - |   |
| Accretion of discount on asset retirement obligation                                     |   |                       | (358       | )      |                     |   | - |   |   |   | (707 | ) |   |   | - |   |
|                                                                                     |   |                       |       |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Income before taxes                                                                      |   |                       | 2,917,338  |   |                     |   | 4,936,891 |   |   |   | 2,352,792 |   |   |   | 4,605,156 |   |
|                                                                                     |   |                       |       |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Provision for income taxes                                                               |   |                       | (4,429     | )      |                     |   | (892,112 | ) |   |   | (4,429 | ) |   |   | (892,112 | ) |
|                                                                                     |   |                       |       |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Net income                                                                               |   | $                          | 2,912,909  |   |                     | $      | 4,044,779 |   |   | $ | 2,348,363 |   |   | $ | 3,713,044 |   |
|                                                                                     |   |                       |       |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Net income per common share:                                                             |   |                       |       |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                                                                    |   | $                          | 0.07       |   |                     | $      | 0.09 |   |   | $ | 0.06 |   |   | $ | 0.08 |   |
| Diluted                                                                                  |   | $                          | 0.07       |   |                     | $      | 0.09 |   |   | $ | 0.05 |   |   | $ | 0.08 |   |
| Weighted average number of shares outstanding -                                          |   |                       |       |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                                                                    |   |                       | 41,005,822 |   |                     |   | 43,532,612 |   |   |   | 41,005,822 |   |   |   | 44,043,152 |   |
| Diluted                                                                                  |   |                       | 44,192,069 |   |                     |   | 44,424,504 |   |   |   | 44,085,405 |   |   |   | 46,168,152 |   |

----

----

|                                                  |   | For the Three-Month Period |      |   | For the Six-Month Period |   |
|-------------------------------------------------------|--------|-------------------------------------------|-----------|--------|-----------------------------------------|--------|
|                                                  |   | Ended June 30,                  |      |   | Ended June 30,                |   |
|                                                  |   | 2011                                      |      |   | 2010                                    |   |   | 2011 |   |   | 2010 |   |
| Net income                                            |   | $                                         | 2,912,909 |   |                                    | $      | 4,044,779 |   |   | $ | 2,348,363 |   |   | $ | 3,713,044 |   |
|                                                  |   |                                      |      |   |                                    |   |   |   |   |   |   |   |   |   |   |   |
| Other comprehensive income (losses), before tax:      |   |                                      |      |   |                                    |   |   |   |   |   |   |   |   |   |   |   |
| Unrealized gains (losses) on securities               |   |                                      | (100,737  | )      |                                    |   | 4,618 |   |   |   | (26,544 | ) |   |   | 4,618 |   |
| Total other comprehensive income (losses), before tax |   |                                      | (100,737  | )      |                                    |   | 4,618 |   |   |   | (26,544 | ) |   |   | 4,618 |   |
|                                                  |   |                                      |      |   |                                    |   |   |   |   |   |   |   |   |   |   |   |
| Comprehensive income                                  |   | $                                         | 2,812,172 |   |                                    | $      | 4,049,397 |   |   | $ | 2,321,819 |   |   | $ | 3,717,662 |   |

----

|                                                                                       |   | 2011   |       |   | 2010   |   |
|--------------------------------------------------------------------------------------------|--------|--------|------------|--------|--------|--------|
| Cash flows provided by (used for) operating activities:                                    |   |   |       |   |   |   |
| Net income                                                                                 |   | $      | 2,348,363  |   |   | $      | 3,713,044 |   |
| Adjustments to reconcile net loss to net cash provided by (used for) operating activities: |   |   |       |   |   |   |   |   |
| Non-cash transactions:                                                                     |   |   |       |   |   |   |   |   |
| Depreciation, depletion and amortization                                                   |   |   | 29,117     |   |   |   | 28,060 |   |
| Accretion of discount on asset retirement obligations                                      |   |   | 707        |   |   |   | - |   |
| Gain on sale of oil and gas properties                                                     |   |   | (3,402,000 | )      |   |   | (5,245,187 | ) |
| Changes in operating assets and liabilities:                                               |   |   |       |   |   |   |   |   |
| Decrease in prepaid expense                                                                |   |   | 24,072     |   |   |   | 40,369 |   |
| Decrease in spud fees receivable                                                           |   |   | -          |   |   |   | 20,000 |   |
| Decrease in other receivables                                                              |   |   | 182,352    |   |   |   | 77,366 |   |
| Increase in amounts due from American Eagle Energy Inc.                                    |   |   | (387,957   | )      |   |   | - |   |
| Increase in accounts payable and accrued liabilities                                       |   |   | 1,973,531  |   |   |   | (25,226 | ) |
| Increase in drilling pre-payments collected                                                |   |   | 788,748    |   |   |   | - |   |
| Net cash provided by (used for) operating activities                                       |   |   | 1,556,933  |   |   |   | (1,391,574 | ) |
|                                                                                       |   |   |       |   |   |   |   |   |
| Cash flows provided by (used for) investing activities:                                    |   |   |       |   |   |   |   |   |
| Additions to equipment and leasehold improvements                                          |   |   | (1,010     | )      |   |   | (1,538 | ) |
| Proceeds from the sale of equipment                                                        |   |   | 700        |   |   |   | - |   |
| Additions to oil and gas properties                                                        |   |   | (1,990,753 | )      |   |   | (35,682 | ) |
| Proceeds from the sale of oil and gas properties                                           |   |   | 3,456,960  |   |   |   | 4,125,000 |   |
| Purchase of equity investments                                                             |   |   | -          |   |   |   | (24,733 | ) |
| Net cash provided by investing activities                                                  |   |   | 1,465,897  |   |   |   | 4,063,047 |   |
|                                                                                       |   |   |       |   |   |   |   |   |
| Cash flows provided by (used for) financing activities:                                    |   |   |       |   |   |   |   |   |
| Repurchase and retirement of shares                                                        |   |   | -          |   |   |   | (111,535 | ) |
| Net cash used for investing activities                                                     |   |   | -          |   |   |   | (111,535 | ) |
|                                                                                       |   |   |       |   |   |   |   |   |
| Net increase in cash                                                                       |   |   | 3,022,830  |   |   |   | 2,559,938 |   |
| Cash - beginning of period                                                                 |   |   | 2,400,362  |   |   |   | 1,508,754 |   |
|                                                                                       |   |   |       |   |   |   |   |   |
| Cash - end of period                                                                       |   | $      | 5,423,192  |   |   | $      | 4,068,692 |   |

----

|                             |   | 2011   |   |   | 2010   |   |
|----------------------------------|--------|--------|--------|--------|--------|--------|
|                             |   |   |   |   |   |   |
| Cash paid during the period for: |   |   |   |   |   |   |
| Interest                         |   | $      | -      |   |   | $      | - |   |
| Income taxes                     |   | $      | 4,429  |   |   | $      | 892,112 |   |

|                                                                 |   | 2011 |    |   | 2010   |   |
|----------------------------------------------------------------------|--------|------|---------|--------|--------|--------|
| Recording of asset retirement obligation, net of discount of $21,150 |   | $    | 1,913   |   |   | $      | - |   |
| Unrealized gain (loss) on marketable securities                      |   | $    | (26,544 | )      |   | $      | 4,618 |   |

----

| 1. | Description of Business |
|----|-------------------------|

| 2. | Summary of Significant Accounting Policies |
|----|--------------------------------------------|

----

----

| Equipment              |   | 3 years                             |
|------------------------|--------|-------------------------------------|
| Leasehold improvements |   | lesser of useful life or lease term |

----

----

----

|                                  |   | Level 1 |      |   | Level 2 |   |    | Level 3 |   |   | Total  |   |
|---------------------------------------|--------|---------|-----------|--------|---------|--------|---------|---------|--------|--------|--------|--------|
| June 30, 2011                         |   |    |      |   |    |   |    |    |   |   |   |   |   |   |   |   |
| Cash & equivalents                |   | $       | 5,423,191 |   |    | $      | -       |    |   | $      | -      |   |   | $ | 5,423,191 |   |
| Marketable securities - related party |   |    | -         |   |    |   | 127,426 |    |   |   | -      |   |   |   | 127,426 |   |
| Marketable securities                 |   |    | 1,161,199 |   |    |   | -       |    |   |   | -      |   |   |   | 1,161,199 |   |
|                                  |   | $       | 6,584,390 |   |    | $      | 127,426 |    |   |   | -      |   |   | $ | 6,711,816 |   |
| December 31, 2010                     |   |    |      |   |    |   |    |    |   |   |   |   |   |   |   |   |
| Cash & equivalents                |   | $       | 2,400,362 |   |    | $      | -       |    |   | $      | -      |   |   | $ | 2,400,362 |   |
| Marketable securities - related party |   |    | -         |   |    |   | 197,453 |    |   |   | -      |   |   |   | 197,453 |   |
| Marketable securities                 |   |    | 1,117,716 |   |    |   | -       |    |   |   | -      |   |   |   | 1,117,716 |   |
|                                  |   | $       | 3,518,078 |   |    | $      | 197,453 |    |   |   | -      |   |   | $ | 3,715,531 |   |

----

----

| 3. | Marketable Securities |
|----|-----------------------|

|                                           |   |      |      |   | Gains in      |   |    | Losses in     |   |
|------------------------------------------------|--------|-----------|-----------|--------|---------------|--------|---------|---------------|--------|
|                                           |   |      |      |   | Accumulated   |   |    | Accumulated   |   |
|                                           |   | Estimated |      |   | Other         |   |    | Other         |   |
|                                           |   | Fair      |      |   | Comprehensive |   |    | Comprehensive |   |
|                                           |   | Value     |      |   | Income        |   |    | Income        |   |
| June 30, 2011                                  |   |      |      |   |          |   |    |          |   |
| Noncurrent assets:                             |   |      |      |   |          |   |    |          |   |
| Common stock                                   |   | $         | 1,161,199 |   |          | $      | 286,226 |          |   | $ | - |   |
| Common stock and warrants - related party      |   |      | 127,426   |   |          |   | 102,693 |          |   |   | - |   |
|                                           |   |      |      |   |          |   |    |          |   |   |   |   |
| Total available-for-sale marketable securities |   | $         | 1,288,625 |   |          | $      | 388,919 |          |   | $ | - |   |
|                                           |   |      |      |   |          |   |    |          |   |   |   |   |
| December 31, 2010:                             |   |      |      |   |          |   |    |          |   |   |   |   |
| Noncurrent assets:                             |   |      |      |   |          |   |    |          |   |   |   |   |
| Common stock                                   |   | $         | 1,117,716 |   |          | $      | 242,743 |          |   | $ | - |   |
| Common stock and warrants - related party      |   |      | 197,453   |   |          |   | 172,720 |          |   |   | - |   |
|                                           |   |      |      |   |          |   |    |          |   |   |   |   |
| Total available-for-sale marketable securities |   | $         | 1,315,169 |   |          | $      | 415,463 |          |   | $ | - |   |

----

| Risk-free interest rate             |   |       | 0.23   | %      |
|-------------------------------------|--------|------------|--------|--------|
| Expected volatility of common stock |   |       | 111    | %      |
| Dividend yield                      |   | $          | 0.00   |   |
| Expected life of warrants           |   | 0.92 years |   |

| 4.  | Sales of Royalty and Property Interests |
|----------|-----------------------------------------|

----

| 5. | Equipment and Leasehold Improvements |
|----|--------------------------------------|

|                                            |   | June 30, |     |   | December 31, |   |
|-------------------------------------------------|--------|----------|----------|--------|--------------|--------|
|                                            |   | 2011     |     |   | 2010         |   |
| Office equipment                                |   | $        | 122,636  |   |         | $      | 122,325 |   |
| Leasehold improvements                          |   |     | 47,509   |   |         |   | 47,510 |   |
|                                            |   |     |     |   |         |   |   |   |
| Total equipment and improvements                |   |     | 170,145  |   |         |   | 169,835 |   |
| Less: accumulated depreciation and amortization |   |     | (153,547 | )      |         |   | (149,142 | ) |
|                                            |   |     |     |   |         |   |   |   |
| Equipment and improvements, net                 |   |     | 16,598   |   |         |   | 20,693 |   |

----

| 6. | Oil and Gas Properties |
|----|------------------------|

|          |   | June 30, 2011 |      |   | December 31, 2010 |   |
|---------------|--------|---------------|-----------|--------|-------------------|--------|
|          |   | Amortizable   |      |   | Non-Amortizable   |   |   | Amortizable |   |   | Non-Amortizable |   |
| United States |   | $             | 976,867   |   |              | $      | 460,207 |   |   | $ | - |   |   | $ | 590,368 |   |
| Canada        |   |          | 858,697   |   |              |   | - |   |   |   | 340,321 |   |   |   | - |   |
| Total         |   | $             | 1,835,564 |   |              | $      | 460,207 |   |   | $ | 340,321 |   |   | $ | 590,368 |   |

----

|                 |   | June 30, |     |   | December 31, |   |
|----------------------|--------|----------|----------|--------|--------------|--------|
|                 |   | 2011     |     |   | 2010         |   |
| Acquisition costs    |   | $        | 133,774  |   |         | $      | 133,774 |   |
| Development costs    |   |     | 853,985  |   |         |   | 310,897 |   |
|                 |   |     | 987,759  |   |         |   | 444,671 |   |
| Cumulative depletion |   |     | (129,062 | )      |         |   | (104,350 | ) |
| Impairment           |   |     | -        |   |         |   | - |   |
| Net capitalized cost |   | $        | 858,697  |   |         | $      | 340,321 |   |

----

|                                                 |   |     |     |    |   |   |     | Aggregate |   |   |       |   |
|------------------------------------------------------|--------|----------|----------|---------|--------|--------|----------|-----------|--------|--------|------------|--------|
|                                                 |   | June 30, |     |    |   |   |     | Through   |   |   |       |   |
|                                                 |   | 2011     |     |    | 2010   |   |     | 2009      |   |   | Total      |   |
| United States                                        |   |     |     |    |   |   |     |      |   |   |       |   |
| Acquisition costs                                    |   | $        | 444,779  |    |   | $      | 386,687  |      |   | $      | 1,976,054  |   |   | $ | 2,807,520 |   |
| Exploration costs                                    |   |     | 777,721  |    |   |   | 69,285   |      |   |   | 136,918    |   |   |   | 983,924 |   |
| Development costs                                    |   |     | -        |    |   |   | -        |      |   |   | -          |   |   |   | - |   |
| Reclassifications to amortizable pool                |   |     | (976,867 | )       |   |   | -        |      |   |   | -          |   |   |   | (976,867 | ) |
| Impairments and sales                                |   |     | (375,793 | )       |   |   | (277,355 | )         |   |   | (1,701,222 | )      |   |   | (2,354,370 | ) |
| United States total                                  |   | $        | (130,160 | )       |   | $      | 178,617  |      |   | $      | 411,750    |   |   | $ | 460,207 |   |
|                                                 |   |     |     |    |   |   |     |      |   |   |       |   |   |   |   |   |
| Canada                                               |   |     |     |    |   |   |     |      |   |   |       |   |   |   |   |   |
| Acquisition costs                                    |   | $        | -        |    |   | $      | -        |      |   | $      | 1,443      |   |   | $ | 1,443 |   |
| Exploration costs                                    |   |     | -        |    |   |   | -        |      |   |   | -          |   |   |   | - |   |
| Development costs                                    |   |     | -        |    |   |   | -        |      |   |   | -          |   |   |   | - |   |
| Impairments and sales                                |   |     | -        |    |   |   | (1,046   | )         |   |   | (397       | )      |   |   | (1,443 | ) |
| Canada total                                         |   | $        | -        |    |   | $      | 1,046    |      |   | $      | 1,046      |   |   | $ | - |   |
|                                                 |   |     |     |    |   |   |     |      |   |   |       |   |   |   |   |   |
| The North Sea                                        |   |     |     |    |   |   |     |      |   |   |       |   |   |   |   |   |
| Acquisition costs                                    |   | $        | -        |    |   | $      | -        |      |   | $      | 197,988    |   |   | $ | 197,988 |   |
| Exploration costs                                    |   |     | -        |    |   |   | -        |      |   |   | 1,512,205  |   |   |   | 1,512,205 |   |
| Development costs                                    |   |     | -        |    |   |   | -        |      |   |   | -          |   |   |   | - |   |
| Impairments                                          |   |     | -        |    |   |   | -        |      |   |   | (1,546,683 | )      |   |   | (1,546,683 | ) |
| Disposals                                            |   |     | -        |    |   |   | -        |      |   |   | (163,510   | )      |   |   | (163,510 | ) |
| North Sea total                                      |   | $        | -        |    |   | $      | -        |      |   | $      | -          |   |   | $ | - |   |
|                                                 |   |     |     |    |   |   |     |      |   |   |       |   |   |   |   |   |
| Total capitalized costs, not subject to amortization |   |     | $        | 460,207 |   |

----

| Well Name      |         | Operator                    |         | WorkingInterest |         | Current Status            |
|---------------------|--------------|-----------------------------|--------------|-----------------|--------------|--------------------------------|
| Aarestad 4-34       |         | North Plains Energy, LLC    |         | 0.63%           |         | Producing                      |
| Aarestad 1-16       |         | North Plains Energy, LLC    |         | 2.51%           |         | Waiting to spud                |
| Bagley 4-30         |         | SM Energy Company           |         | 4.69%           |         | Producing                      |
| Blazer 2-11         |         | Samson Resources Company    |         | 0.94%           |         | Waiting to be fractured        |
| CPEC Lancaster 2-1  |         | Crescent Point Energy       |         | 6.21%           |         | Drilling                       |
| CPEC Ridgeway 25-36 |         | Crescent Point Energy       |         | 1.88%           |         | Waiting to spud                |
| Denali 13-21        |         | Samson Resources Company    |         | 0.04%           |         | Waiting to be fractured        |
| Gerhardsen 1-10     |         | Continental Resources Inc.  |         | 1.91%           |         | Producing                      |
| Legaard 4-25        |         | SM Energy Company           |         | 5.23%           |         | Drilling                       |
| Mustang 7-6         |         | Samson Resources Company    |         | 0.31%           |         | Waiting to be fractured        |
| Nielsen 1-12        |         | Continental Resources Inc.  |         | 0.38%           |         | Completed.  Shut in. |
| Reistad 1-1         |         | Murex Petroleum Corporation |         | 3.25%           |         | Waiting to be completed        |
| Riede 4-14          |         | SM Energy Company           |         | 0.33%           |         | Waiting to be fractured        |
| Torgeson 1-15       |         | SM Energy Company           |         | 2.81%           |         | Waiting to be fractured        |
| Wolter 1-28         |         | SM Energy Company           |         | 1.30%           |         | Producing                      |
| Wolter 13-9         |         | SM Energy Company           |         | 7.03%           |         | Drilling                       |
| Yukon 12-1          |    | Samson Resources Company    |    | 1.25%           |    | Waiting to be fractured        |

----

----

|                                      |   | June 30, |      |   | December 31, |   |
|-------------------------------------------|--------|----------|-----------|--------|--------------|--------|
|                                      |   | 2011     |      |   | 2010         |   |
|                                      |   |     |      |   |         |   |   |   |
| Balance at the beginning of the period    |   | $        | 590,368   |   |         | $      | 412,797 |   |
| Additions to exploratory costs            |   |     | 1,222,499 |   |         |   | 455,972 |   |
| Impairments / gain allocations            |   |     | (375,793  | )      |         |   | (278,401 | ) |
| Reclassifications to the amortizable pool |   |     | (976,867  | )      |         |   | - |   |
|                                      |   |     |      |   |         |   |   |   |
| Balance at the end of the period          |   | $        | 460,207   |   |         | $      | 590,368 |   |

|                 |   | June 30, 2011 |   |   | June 30, 2010 |   |
|----------------------|--------|---------------|--------|--------|---------------|--------|
| Exploratory wells:   |   | U.S.          |   |   | Canada        |   |   | U.S. |   |   | Canada |   |
|                 |   |          |   |   |          |   |   |   |   |   |   |   |
| Beginning of period  |   |          | 1      |   |          |   | - |   |   |   | - |   |   |   | - |   |
| Purchased / acquired |   |          | -      |   |          |   | - |   |   |   | - |   |   |   | - |   |
| Drilled              |   |          | 1      |   |          |   | - |   |   |   | - |   |   |   | - |   |
| Abandoned            |   |          | -      |   |          |   | - |   |   |   | - |   |   |   | - |   |
| End of period        |   |          | 2      |   |          |   | - |   |   |   | - |   |   |   | - |   |

----

|                 |   | June 30, 2011 |   |   | June 30, 2010 |   |
|----------------------|--------|---------------|--------|--------|---------------|--------|
| Development wells:   |   | U.S.          |   |   | Canada        |   |   | U.S. |   |   | Canada |   |
|                 |   |          |   |   |          |   |   |   |   |   |   |   |
| Beginning of period  |   |          | -      |   |          |   | 1 |   |   |   | - |   |   |   | - |   |
| Purchased / acquired |   |          | -      |   |          |   | - |   |   |   | - |   |   |   | 1 |   |
| Drilled              |   |          | -      |   |          |   | 1 |   |   |   | - |   |   |   | - |   |
| Abandoned            |   |          | -      |   |          |   | - |   |   |   | - |   |   |   | - |   |
| End of period        |   |          | -      |   |          |   | 2 |   |   |   | - |   |   |   | 1 |   |

|                 |   | June 30, 2011 |   |   | June 30, 2010 |   |
|----------------------|--------|---------------|--------|--------|---------------|--------|
| Exploratory wells:   |   | U.S.          |   |   | Canada        |   |   | U.S. |   |   | Canada |   |
|                 |   |          |   |   |          |   |   |   |   |   |   |   |
| Beginning of period  |   |          | -      |   |          |   | - |   |   |   | - |   |   |   | - |   |
| Purchased / acquired |   |          | -      |   |          |   | - |   |   |   | - |   |   |   | - |   |
| Drilled              |   |          | 2      |   |          |   | - |   |   |   | - |   |   |   | - |   |
| Abandoned            |   |          | -      |   |          |   | - |   |   |   | - |   |   |   | - |   |
| End of period        |   |          | 2      |   |          |   | - |   |   |   | - |   |   |   | - |   |

|                 |   | June 30, 2011 |   |   | June 30, 2010 |   |
|----------------------|--------|---------------|--------|--------|---------------|--------|
| Development wells:   |   | U.S.          |   |   | Canada        |   |   | U.S. |   |   | Canada |   |
|                 |   |          |   |   |          |   |   |   |   |   |   |   |
| Beginning of period  |   |          | -      |   |          |   | 1 |   |   |   | - |   |   |   | - |   |
| Purchased / acquired |   |          | -      |   |          |   | - |   |   |   | - |   |   |   | 1 |   |
| Drilled              |   |          | -      |   |          |   | 1 |   |   |   | - |   |   |   | - |   |
| Abandoned            |   |          | -      |   |          |   | - |   |   |   | - |   |   |   | - |   |
| End of period        |   |          | -      |   |          |   | 2 |   |   |   | - |   |   |   | 1 |   |

| 7. | Asset Retirement Obligations |
|----|------------------------------|

----

| 8. | Commitments and Contingencies |
|----|-------------------------------|

----

|                         |   | Amount |   |
|------------------------------|--------|--------|--------|
| 2011 (remainder of the year) |   | $      | 32,070 |   |
| 2012                         |   |   | -      |   |
| 2013                         |   |   | -      |   |
| 2014                         |   |   | -      |   |
| 2015                         |   |   | -      |   |
|                         |   |   |   |   |
| Total                        |   | $      | 32,070 |   |

| 9. | Earnings Per Share |
|----|--------------------|

|                                                                   |   | For the Three-Month   |       |   | For the Six-Month     |   |
|------------------------------------------------------------------------|--------|-----------------------|------------|--------|-----------------------|--------|
|                                                                   |   | Period Ended June 30, |       |   | Period Ended June 30, |   |
|                                                                   |   | 2011                  |       |   | 2010                  |   |   | 2011 |   |   | 2010 |   |
| Net income                                                             |   | $                     | 2,912,909  |   |                  | $      | 4,044,779 |   |   | $ | 2,348,363 |   |   | $ | 3,713,044 |   |
| Weighted-average number of common shares outstanding                   |   |                  | 41,005,822 |   |                  |   | 43,532,612 |   |   |   | 41,005,822 |   |   |   | 44,043,152 |   |
| Incremental shares from the assumed exercise of dilutive stock options |   |                  | 3,186,247  |   |                  |   | 891,892 |   |   |   | 3,079,583 |   |   |   | 2,125,000 |   |
| Diluted common shares outstanding                                      |   |                  | 44,192,069 |   |                  |   | 44,424,504 |   |   |   | 44,085,405 |   |   |   | 46,168,152 |   |
| Basic earnings per share                                               |   | $                     | 0.07       |   |                  | $      | 0.09 |   |   | $ | 0.06 |   |   | $ | 0.08 |   |
| Diluted earnings per share                                             |   | $                     | 0.07       |   |                  | $      | 0.09 |   |   | $ | 0.05 |   |   | $ | 0.08 |   |

----

| 10. | Equity Transactions |
|-----|---------------------|

|                             |   |    |       |   |     |   |   | Weighted  |   |
|----------------------------------|--------|---------|------------|--------|----------|--------|--------|-----------|--------|
|                             |   |    |       |   | Weighted |   |   | Average   |   |
|                             |   |    |       |   | Average  |   |   | Remaining |   |
|                             |   |    |       |   | Exercise |   |   | Contract  |   |
|                             |   | Options |       |   | Price    |   |   | Term      |   |
|                             |   |    |       |   |     |   |   |      |   |
| Outstanding at December 31, 2009 |   |    | 6,000,000  |   |     | $      | 0.05   |      |   | 3.4 years |   |
|                             |   |    |       |   |     |   |   |      |   |   |   |
| Options granted                  |   |    | -          |   |     |   | -      |      |   | - |   |
| Options exercised                |   |    | (2,308,000 | )      |     |   | 0.05   |      |   | - |   |
| Options expired                  |   |    | -          |   |     |   | -      |      |   | - |   |
| Options forfeited                |   |    | -          |   |     |   | -      |      |   | - |   |
|                             |   |    |       |   |     |   |   |      |   |   |   |
| Outstanding at December 31, 2010 |   |    | 3,692,000  |   |     | $      | 0.05   |      |   | 2.4 years |   |
|                             |   |    |       |   |     |   |   |      |   |   |   |
| Options granted                  |   |    | -          |   |     |   | -      |      |   | - |   |
| Options exercised                |   |    | -          |   |     |   | -      |      |   | - |   |
| Options expired                  |   |    | -          |   |     |   | -      |      |   | - |   |
| Options forfeited                |   |    | -          |   |     |   | -      |      |   | - |   |
|                             |   |    |       |   |     |   |   |      |   |   |   |
| Outstanding at June 30, 2011     |   |    | 3,692,000  |   |     | $      | 0.05   |      |   | 2.0 years |   |
| Exercisable at June 30, 2011     |   |    | 3,692,000  |   |     | $      | 0.05   |      |   | 2.0 years |   |

----

| 11. | Related Party Transactions |
|-----|----------------------------|

| 13. | Proposed Merger |
|-----|-----------------|

----

| Financial assets acquired                           |   | $      | 4,425,307  |   |
|-----------------------------------------------------|--------|--------|------------|--------|
| Oil and gas properties, subject to amortization     |   |   | 1,939,053  |   |
| Oil and gas properties, not subject to amortization |   |   | 8,836,945  |   |
| Financial liabilities assumed                       |   |   | (2,100,045 | )      |
| Purchase price                                      |   | $      | 13,101,260 |   |

|   | · | An effective date of January 1, 2010 was used to present what the combined entities’ financial position may have been as of June 30, 2011 and December 31, 2010 and what its results of operations may have been for the six-month period ended June 30, 2011. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | No adjustments were made to reflect economies of scale or other potential cost savings that may have been achieved had the merger occurred on January 1, 2010. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | No adjustments were made relative to alternative financing strategies that may have been implemented on a combined entity basis. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | The estimated fair market value of AEE’s oil and gas properties, subject to amortization, is based on the net present value of future cash flows from proven reserves as of December 31, 2010, as calculated by an independent, third-party engineering firm. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The estimated fair market values of AEE’s oil and gas properties, not subject to amortization, were determined by management based on management’s knowledge of prevailing leasing costs associated with acreage located in close proximity to AEE’s properties and/or recent acreage purchase transactions as of or near to June 30, 2011. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | All purchase accounting adjustments and allocations were determined assuming that the business combination occurred on June 30, 2011. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------|

|   | · | As discussed in Note 5, the Company and AEE each sold half of their respective working interests in the Spyglass Prospect in May 2011.  This transaction was considered in determining the purchase accounting entries that were used to prepare the June 30, 2011 pro forma balance sheet.  The sale of the Spyglass working interests was not considered in determining the purchase accounting entries that were used to prepare the December 31, 2010 balance sheet as the sale had not yet occurred at that time. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                                                      |   |    |       |   | American |   |      | Pro         |   |   |       |   |
|-------------------------------------------------------------------------------------------|--------|---------|------------|--------|----------|--------|-----------|-------------|--------|--------|------------|--------|
|                                                                                      |   | Eternal |       |   | Eagle    |   |      | Forma       |   |   | Pro        |   |
|                                                                                      |   | Energy  |       |   | Energy   |   |      | Adjustments |   |   | Forma      |   |
|                                                                                      |   |    |       |   |     |   |      |        |   |   |       |   |
| Cash & equivalents                                                                    |   | $       | 5,423,192  |   |     | $      | 3,157,630 |        |   | $      | 56,939     | (f)    |   | $ | 8,637,761 |   |
| Trade receivables                                                                         |   |    | 614,021    |   |     |   | 1,127,387 |        |   |   | -          |   |   |   | 1,741,408 |   |
| Intercompany receivables                                                                  |   |    | 667,333    |   |     |   |      |        |   |   | (667,333   | )(a)   |   |   | - |   |
| Stock subscriptions receivable                                                            |   |    | -          |   |     |   |      |        |   |   | -          |   |   |   |   |   |
| Prepaid expenses                                                                          |   |    | 6,034      |   |     |   | 12,864    |        |   |   | -          |   |   |   | 18,898 |   |
| Total current assets                                                                      |   |    | 6,710,580  |   |     |   | 4,297,881 |        |   |   | (610,394   | )      |   |   | 10,398,067 |   |
|                                                                                      |   |    |       |   |     |   |      |        |   |   |       |   |   |   |   |   |
| Equipment and leasehold improvements, net of accumulated depreciation of $151,668         |   |    | 16,598     |   |     |   | -         |        |   |   | -          |   |   |   | 16,598 |   |
| Oil and gas properties, subject to amortization, net of accumulated depletion of $271,141 |   |    | 1,835,564  |   |     |   | 1,977,937 |        |   |   | (75,310    | )(d)   |   |   | 3,738,191 |   |
| Oil and gas properties, not subject to amortization                                       |   |    | 460,207    |   |     |   | 3,337,761 |        |   |   | 5,499,184  | (d)    |   |   | 9,297,152 |   |
| Marketable securities                                                                     |   |    | 1,161,199  |   |     |   | -         |        |   |   | -          |   |   |   | 1,161,199 |   |
| Marketable securities - related party                                                     |   |    | 127,426    |   |     |   | 127,426   |        |   |   | -          |   |   |   | 254,852 |   |
| Deposits                                                                                  |   |    | 5,345      |   |     |   | -         |        |   |   | -          |   |   |   | 5,345 |   |
|                                                                                      |   |    |       |   |     |   |      |        |   |   |       |   |   |   |   |   |
| Total assets                                                                              |   | $       | 10,316,919 |   |     | $      | 9,741,005 |        |   | $      | 4,813,480  |   |   | $ | 24,871,404 |   |
|                                                                                      |   |    |       |   |     |   |      |        |   |   |       |   |   |   |   |   |
| Accounts payable and accrued liabilities                                                  |   | $       | 2,404,230  |   |     | $      | 1,402,239 |        |   | $      | (40,000    | )(f)   |   | $ | 3,766,469 |   |
| Intercompany payables                                                                     |   |    | -          |   |     |   | 667,333   |        |   |   | (667,333   | )(a)   |   |   | - |   |
| Due to Passport Energy                                                                    |   |    | 788,748    |   |     |   | -         |        |   |   |       |   |   |   | 788,748 |   |
| Amounts due to related parties                                                            |   |    |       |   |     |   | 14,000    |        |   |   |  -    |   |   |   | 14,000 |   |
| Convertible debenture, net of debt discount of $496,601                                   |   |    | -          |   |     |   | 503,399   |        |   |   | (503,399   | )(c)   |   |   | - |   |
| Total current liabilities                                                                 |   |    | 3,192,978  |   |     |   | 2,586,971 |        |   |   | (1,210,732 | )      |   |   | 4,569,217 |   |
|                                                                                      |   |    |       |   |     |   |      |        |   |   |       |   |   |   |   |   |
| Long-term asset retirement obligation, net of discount of $88,180                         |   |    | 16,473     |   |     |   | 16,473    |        |   |   | -          |   |   |   | 32,946 |   |
|                                                                                      |   |    |       |   |     |   |      |        |   |   |       |   |   |   |   |   |
| Total liabilities                                                                         |   |    | 3,209,451  |   |     |   | 2,603,444 |        |   |   | (1,210,732 | )      |   |   | 4,602,163 |   |
|                                                                                      |   |    |       |   |     |   |      |        |   |   |       |   |   |   |   |   |
| Common stock                                                                              |   |    | 41,006     |   |     |   | 43,374    |        |   |   | 120,649    | (c,d)  |   |   | 205,029 |   |
| Additional paid in capital                                                                |   |    | 9,199,305  |   |     |   | 7,224,331 |        |   |   | 5,053,995  | (c,d)  |   |   | 21,477,631 |   |
| Unrealized gains on marketable securities                                                 |   |    | 388,919    |   |     |   | 101,880   |        |   |   | (101,880   | )(d)   |   |   | 388,919 |   |
| Accumulated deficit                                                                       |   |    | (2,521,762 | )      |     |   | (232,024  | )           |   |   | 951,448    | (c,d)  |   |   | (1,802,338 | ) |
|                                                                                      |   |    |       |   |     |   |      |        |   |   |       |   |   |   |   |   |
| Total stockholders’ equity                                                          |   |    | 7,107,468  |   |     |   | 7,137,561 |        |   |   | 6,024,212  |   |   |   | 20,269,241 |   |
|                                                                                      |   |    |       |   |     |   |      |        |   |   |       |   |   |   |   |   |
| Total stockholders’ equity and liabilities                                          |   | $       | 10,316,919 |   |     | $      | 9,741,005 |        |   | $      | 4,813,480  |   |   | $ | 24,871,404 |   |

----

|                                                                                      |   |    |       |   | American |   |       | Pro         |   |   |      |   |
|-------------------------------------------------------------------------------------------|--------|---------|------------|--------|----------|--------|------------|-------------|--------|--------|-----------|--------|
|                                                                                      |   | Eternal |       |   | Eagle    |   |       | Forma       |   |   | Pro       |   |
|                                                                                      |   | Energy  |       |   | Energy   |   |       | Adjustments |   |   | Forma     |   |
|                                                                                      |   |    |       |   |     |   |       |        |   |   |      |   |
| Cash & equivalents                                                                    |   | $       | 2,400,362  |   |     | $      | 79,768     |        |   | $      | 16,939    | (f)    |   | $ | 2,497,069 |   |
| Trade receivables                                                                         |   |    | 248,461    |   |     |   | -          |        |   |   | -         |   |   |   | 248,461 |   |
| Intercompany receivables                                                                  |   |    | 279,376    |   |     |   | -          |        |   |   | (279,376  | )(a)   |   |   | - |   |
| Stock subscriptions receivable                                                            |   |    | -          |   |     |   | 2,666,667  |        |   |   | 833,333   | (b)    |   |   | 3,500,000 |   |
| Prepaid expenses                                                                          |   |    | 30,106     |   |     |   | -          |        |   |   | -         |   |   |   | 30,106 |   |
| Total current assets                                                                      |   |    | 2,958,305  |   |     |   | 2,746,435  |        |   |   | 570,896   |   |   |   | 6,275,636 |   |
|                                                                                      |   |    |       |   |     |   |       |        |   |   |      |   |   |   |   |   |
| Equipment and leasehold improvements, net of accumulated depreciation of $149,142         |   |    | 20,693     |   |     |   | -          |        |   |   | -         |   |   |   | 20,693 |   |
| Oil and gas properties, subject to amortization, net of accumulated depletion of $298,767 |   |    | 340,321    |   |     |   | 965,848    |        |   |   | 822,195   | (d)    |   |   | 2,128,364 |   |
| Oil and gas properties, not subject to amortization                                       |   |    | 590,368    |   |     |   | 2,820,301  |        |   |   | 7,430,664 | (d)    |   |   | 10,841,333 |   |
| Marketable securities                                                                     |   |    | 1,117,716  |   |     |   | -          |        |   |   | -         |   |   |   | 1,117,716 |   |
| Marketable securities of related party                                                    |   |    | 197,453    |   |     |   | 197,453    |        |   |   | -         |   |   |   | 394,906 |   |
| Deposits                                                                                  |   |    | 5,345      |   |     |   | -          |        |   |   | -         |   |   |   | 5,345 |   |
|                                                                                      |   |    |       |   |     |   |       |        |   |   |      |   |   |   |   |   |
| Total assets                                                                              |   | $       | 5,230,201  |   |     | $      | 6,730,037  |        |   | $      | 8,823,755 |   |   | $ | 20,783,993 |   |
|                                                                                      |   |    |       |   |     |   |       |        |   |   |      |   |   |   |   |   |
| Accounts payable and accrued liabilities                                                  |   | $       | 430,699    |   |     | $      | 758,032    |        |   | $      | (40,000   | )(f)   |   | $ | 1,148,731 |   |
| Intercompany payables                                                                     |   |    | -          |   |     |   | 279,376    |        |   |   | (279,376  | )(a)   |   |   | - |   |
| Amounts due to related parties                                                            |   |    | -          |   |     |   | 20,000     |        |   |   | -         |   |   |   | 20,000 |   |
| Total current liabilities                                                                 |   |    | 430,699    |   |     |   | 1,057,408  |        |   |   | (319,376  | )      |   |   | 1,168,731 |   |
|                                                                                      |   |    |       |   |     |   |       |        |   |   |      |   |   |   |   |   |
| Convertible debenture, net of debt discount of $926,333                                   |   |    | -          |   |     |   | 73,667     |        |   |   | (73,667   | )(c)   |   |   | - |   |
| Long-term asset retirement obligation, net of discount of $47,294                         |   |    | 13,853     |   |     |   | 13,853     |        |   |   | -         |   |   |   | 27,706 |   |
|                                                                                      |   |    |       |   |     |   |       |        |   |   |      |   |   |   |   |   |
| Total liabilities                                                                         |   |    | 444,552    |   |     |   | 1,144,928  |        |   |   | (393,043  | )      |   |   | 1,196,437 |   |
|                                                                                      |   |    |       |   |     |   |       |        |   |   |      |   |   |   |   |   |
| Common stock                                                                              |   |    | 41,006     |   |     |   | 37,540     |        |   |   | 126,483   | (c,d)  |   |   | 205,029 |   |
| Additional paid in capital                                                                |   |    | 9,199,305  |   |     |   | 7,230,166  |        |   |   | 7,202,422 | (c,d)  |   |   | 23,631,893 |   |
| Stock subscriptions receivable                                                            |   |    | -          |   |     |   | (833,333   | )           |   |   | 833,333   | (b)    |   |   | - |   |
| Unrealized gains on marketable securities                                                 |   |    | 415,463    |   |     |   | 172,818    |        |   |   | (172,818  | )(d)   |   |   | 415,463 |   |
| Accumulated deficit                                                                       |   |    | (4,870,125 | )      |     |   | (1,022,082 | )           |   |   | 1,227,378 | (c,d)  |   |   | (4,664,829 | ) |
|                                                                                      |   |    |       |   |     |   |       |        |   |   |      |   |   |   |   |   |
| Total stockholders’ equity                                                          |   |    | 4,785,649  |   |     |   | 5,585,109  |        |   |   | 9,216,798 |   |   |   | 19,587,556 |   |
|                                                                                      |   |    |       |   |     |   |       |        |   |   |      |   |   |   |   |   |
| Total stockholders’ equity and liabilities                                          |   | $       | 5,230,201  |   |     | $      | 6,730,037  |        |   | $      | 8,823,755 |   |   | $ | 20,783,993 |   |

----

|                                                   |   |    |      |   | American |   |      | Pro         |   |   |    |   |
|--------------------------------------------------------|--------|---------|-----------|--------|----------|--------|-----------|-------------|--------|--------|---------|--------|
|                                                   |   | Eternal |      |   | Eagle    |   |      | Forma       |   |   | Pro     |   |
|                                                   |   | Energy  |      |   | Energy   |   |      | Adjustments |   |   | Forma   |   |
|                                                   |   |    |      |   |     |   |      |        |   |   |    |   |
| Oil and gas sales                                      |   | $       | 52,805    |   |     | $      | 46,477    |        |   | $      | -       |   |   | $ | 99,282 |   |
| Gain on sale of oil and gas prospects                  |   |    | 3,402,000 |   |     |   | 2,085,627 |        |   |   | -       |   |   |   | 5,487,627 |   |
| Total revenues                                         |   |    | 3,454,805 |   |     |   | 2,132,104 |        |   |   | -       |   |   |   | 5,586,909 |   |
|                                                   |   |    |      |   |     |   |      |        |   |   |    |   |   |   |   |   |
| Oil and gas operating expenses                         |   |    | 115,691   |   |     |   | 117,676   |        |   |   | -       |   |   |   | 233,367 |   |
| General and administrative expenses                    |   |    | 344,906   |   |     |   | 275,072   |        |   |   | -       |   |   |   | 619,978 |   |
| Professional fees                                      |   |    | 649,154   |   |     |   | 382,376   |        |   |   | -       |   |   |   | 1,031,530 |   |
| Professional fees – related party                |   |    | -         |   |     |   | 68,000    |        |   |   | -       |   |   |   | 68,000 |   |
| Depreciation, depletion and amortization               |   |    | 29,117    |   |     |   | 28,482    |        |   |   | -       |   |   |   | 57,599 |   |
| Total operating expenses                               |   |    | 1,138,868 |   |     |   | 871,606   |        |   |   | -       |   |   |   | 2,010,474 |   |
|                                                   |   |    |      |   |     |   |      |        |   |   |    |   |   |   |   |   |
| Operating loss                                         |   |    | 2,315,937 |   |     |   | 1,260,498 |        |   |   | -       |   |   |   | 3,576,435 |   |
|                                                   |   |    |      |   |     |   |      |        |   |   |    |   |   |   |   |   |
| Interest income                                        |   |    | 3,030     |   |     |   | -         |        |   |   | -       |   |   |   | 3,030 |   |
| Dividend income                                        |   |    | 34,532    |   |     |   | -         |        |   |   | -       |   |   |   | 34,532 |   |
| Interest expense                                       |   |    | -         |   |     |   | (40,000   | )           |   |   | 40,000  | (f)    |   |   | - |   |
| Accretion of discount on asset retirement obligation   |   |    | (707      | )      |     |   | (707      | )           |   |   | -       |   |   |   | (1,414 | ) |
| Accretion of discount on convertible debenture         |   |    | -         |   |     |   | (429,733  | )           |   |   | 429,733 | (c)    |   |   | - |   |
|                                                   |   |    |      |   |     |   |      |        |   |   |    |   |   |   |   |   |
| Loss before taxes                                      |   |    | 2,352,792 |   |     |   | 790,058   |        |   |   | 469,733 |   |   |   | 3,612,583 |   |
|                                                   |   |    |      |   |     |   |      |        |   |   |    |   |   |   |   |   |
| Provision for income taxes                             |   |    | (4,429    | )      |     |   | -         |        |   |   | -       |   |   |   | (4,429 | ) |
|                                                   |   |    |      |   |     |   |      |        |   |   |    |   |   |   |   |   |
| Net income                                             |   | $       | 2,348,363 |   |     | $      | 790,058   |        |   | $      | 469,733 |   |   | $ | 3,608,154 |   |
|                                                   |   |    |      |   |     |   |      |        |   |   |    |   |   |   |   |   |
| Basic and diluted loss per share                       |   |    |      |   |     |   |      |        |   |   |    |   |   | $ | 0.02 |   |
|                                                   |   |    |      |   |     |   |      |        |   |   |    |   |   |   |   |   |
| Basic and diluted weighted average shares outstanding: |   |    |      |   |     |   |      |        |   |   |    |   |   |   | 206,486,818 |   |

----

|   | (a) | Elimination of intercompany amounts owed to/from the Company and AEE. |
|--------|-----|-----------------------------------------------------------------------|

|   | (b) | Business combination adjustment to record $833,333 of stock subscriptions collected by AEE prior to the business combination. |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------|

|   | (c) | Adjustment to record the conversion of the debenture as a condition precedent to the completion of the business combination, which results in a $1,000,000 increase to equity, a reduction of accretion expense of $429,733 for the six-months ended June 30, 2011 and a reduction of accumulated deficit of $496,601 as of June 30, 2011 and $66,868 as of December 31, 2010. |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (d) | Purchase accounting entry to record the issuance of 164,023,288 shares of the Company’s common stock, to eliminate the historical equity accounts of AEE, and to adjust the value of oil and gas properties acquired. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (e) | Adjustment to reflect depletion expense as if the business combination (and purchase accounting adjustments) had occurred on January 1, 2010. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------|

|   | (f) | Adjustment to reverse interest expense associated with the convertible debenture as if the conversion had occurred on January 1, 2010. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------|

| 14. | Subsequent Events |
|-----|-------------------|

----

----

----

|   | · | The 2011 sales relate to our 50% working interest in the Hardy 7-9 well, which was acquired in June 2010 and placed on production in September 2010.  The well operated during a portion of April 2011 before being shut in for mechanical and weather-related issues.  The well remained shut-in through June 30, 2011.  The well has since been returned to production. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The 2010 sales relate to revenues received from our 5% overriding royalty interests in certain properties located in Saskatchewan, Canada.  We sold our overriding royalty interests to Ryland Oil Corporation (“Ryland”) in June 2010. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | Payroll and employee benefit related costs declined by $67,525, as a result of a staff reduction that occurred in November 2011. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------|

|   | · | We recognized foreign exchange losses totaling $21,637 relating to currency fluctuations between the US Dollar and the Canadian Dollar.  The majority of our transactions related to our Hardy Property are transacted in Canadian Dollars.  No such losses were incurred during the comparable period in 2010. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | In May 2011, we paid fees totaling $17,595 to a certain director as compensation for serving on the Special Committee that was formed to review the proposed merger transaction with American Eagle Energy Inc. (“AEE”).  This is the only time that we have ever compensated any of our directors through a cash payment. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Insurance expense increased by $16,120 related to the operation of the Hardy 7-9 well.  We incurred no such cost during the three-month period ended June 30, 2010, as the well had not yet been returned to production. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | We incurred legal fees totaling $153,449 during the three-month period ended June 30, 2011, primarily related to our proposed merger with AEE.  Legal fees for the three-month period ended June 30, 2010 totaled $77,221. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | We also incurred consulting fees totaling $19,282 during the second quarter of 2011, primarily related to business valuation services obtained in connection with our proposed merger with AEE.  We incurred no such costs during the comparable period in 2010. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Accounting fees for the three-month period ended June 30, 2011 increased by $52,894 from the same period in 2010 due to services received in connection with the proposed merger with AEE, and related SEC filings, as well as engaging a third-party individual to perform all accounting functions.  These functions were previously performed by our former Chief Financial Officer. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | The 2011 sales relate primarily to our 50% working interest in the Hardy 7-9 well, which was acquired in June 2010 and placed on production in September 2010.  In January 2011, the well encountered mechanical problems and was taken off of production due to a parted rod string.  The well was repaired and returned to production in March 2011.  The well was once again taken off of production in mid-April due to mechanical issues.  The well bore was repaired in May 2011, but the well remained shut-in through June 30, 2011 due to inclement weather conditions. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | In January 2011, we began recognizing revenue associated with our small, working interest position in the Aarestad 4-34 well, which was completed in December 2010. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The 2010 sales relate to revenues received from our 5% overriding royalty interests in certain properties located in Saskatchewan, Canada.  We sold our overriding royalty interests to Ryland in June 2010. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | Payroll and benefits related expenses decreased by $156,359, as a result of staff reductions that occurred in November 2010. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------|

|   | · | Land management fees for the six-month period ended June 30, 2011 declined by $23,910 from the same period in 2010, as a result of switching from a full-time resource to a shared we share with AEE. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | We recognized foreign exchange losses totaling $28,584 relating to currency fluctuations between the US Dollar and the Canadian Dollar.  The majority of our transactions related to our Hardy Property are transacted in Canadian Dollars.  No such losses were incurred during the comparable period in 2010. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | In May 2011, we paid fees totaling $17,595 to a certain director as compensation for serving on the Special Committee that was formed to review the proposed merger transaction with AEE.  This is the only time that we have ever compensated any of our directors through a cash payment. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Insurance expense increased by $16,120 related to the operation of the Hardy 7-9 well.  We incurred no such cost during the six-month period ended June 30, 2010 as the well had not yet been returned to production. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Travel related expenses increased by 10,403 from 2010 to 2011 in connection with our proposed merger with AEE and related activities. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------|

|   | · | We incurred legal fees totaling $390,266 during the six-month period ended June 30, 2011, primarily related to our proposed merger with AEE.  Legal fees for the six-month period ended June 30, 2010 totaled $153,875.  The 2010 fees related to a proposed merger with Ryland.  The merger with Ryland was never completed. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | We also incurred consulting fees totaling $153,192 during the six-month period ended June 30, 2011, the majority of which related to business valuation services obtained in connection with our proposed merger with AEE.  Consulting fees for the six-month period ended June 30, 2010 totaled $52,550 and consisted of fees associated with the obtaining of a fairness opinion related to our contemplated merger with Ryland in March 2010.  The Ryland merger transaction was never completed. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Accounting fees for the six-month period ended June 30, 2011 totaled $105,696, compared to $32,000 for the six-month period ended June 30, 2010.  The increase is primarily due to additional auditing services obtained in connection with our proposed merger with AEE, and related SEC filings, as well as fees incurred as a result of outsourcing of all accounting related activities beginning in November 2010. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

| Exhibit |   | Description of Exhibit                                                                                                                                                                                                                                                                                                                  |
|---------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|    |   |                                                                                                                                                                                                                                                                                                                                    |
| 2.1     |   | Agreement and Plan of Merger, dated April 8, 2011, by and among Eternal Energy Corp., Eternal Sub Corp., and American Eagle Energy Inc. (Incorporated by reference to Exhibit 2.1 of our Registration Statement on form S-4 filed May 4, 2011, and attached as Annex A to the prospectus that is part of such Registration Statement.)  |
|    |   |                                                                                                                                                                                                                                                                                                                                    |
| 3(i).1  |   | Articles of Incorporation filed with the Nevada Secretary of State on July 25, 2003. (Incorporated by reference to Exhibit 3.1 of our Form 10-SB filed August 18, 2004.)                                                                                                                                                                |
| 3(i).2  |   | Certificate of Change filed with the Nevada Secretary of State effective November 7, 2005. (Incorporated by reference to Exhibit 3(i).2 of our Current Report on Form 8-K filed November 9, 2005.)                                                                                                                                      |
| 3(i).3  |   | Articles of Merger filed with the Nevada Secretary of State effective November 7, 2005. (Incorporated by reference to Exhibit 3(i).3 of our Current Report on Form 8-K filed November 9, 2005.)                                                                                                                                         |
| 3(ii).1 |   | Bylaws, adopted July 18, 2003. (Incorporated by reference to Exhibit 3.2 of our Form 10-SB filed August 18, 2004.)                                                                                                                                                                                                                      |
| 3(ii).2 |   | Amendment No. 1 to Bylaws, adopted November 4, 2005. (Incorporated by reference to Exhibit 3(ii) of our Current Report on Form 8-K filed November 9, 2005.)                                                                                                                                                                             |
| 10.1    |   | Agreement and Plan of Merger between Golden Hope Resources Corp. (renamed Eternal Energy Corp.) and Eternal Energy Corp., filed with the Nevada Secretary of State effective November 7, 2005. (Incorporated by reference to Exhibit 10.1 of our Current Report on Form 8-K filed November 9, 2005.)                                    |
| 10.2    |   | Purchase and Sale Agreement by and between Eternal Energy Corp., PNP Petroleum I, LP, Cibolo Energy Operating, Inc. and Century Assets Corporation, dated June 25, 2010.  (Incorporated by reference to Exhibit 10.2 of our Quarterly Report on Form 10-Q filed August 16, 2010.)                                             |
| 10.3    |   | Purchase and Sale Agreement between Eternal Energy Corp. and American Eagle Energy Inc. dated June 18, 2010.  (Incorporated by reference to Exhibit 10.3 of our Quarterly Report on Form 10-Q filed August 16, 2010.)                                                                                                         |
| 10.4    |   | Reserved for future use.                                                                                                                                                                                                                                                                                                                |
| 10.5    |   | Reserved for future use.                                                                                                                                                                                                                                                                                                                |
| 10.6    |   | Letter Agreement by and between Eternal Energy Corp. and International Frontier Resources Corporation. (Incorporated by reference to Exhibit 10.1 of our Current Report on Form 8-K filed December 5, 2005.)                                                                                                                            |
| 10.7    |   | Reserved for future use.                                                                                                                                                                                                                                                                                                                |
| 10.8    |   | Reserved for future use.                                                                                                                                                                                                                                                                                                                |
| 10.9    |   | Letter Agreement by and between Eternal Energy Corp. and International Frontier Resources Corporation Relating to Quad 41 and Quad 42 dated January 30, 2006. (Incorporated by reference to Exhibit 10.1 of our Current Report on Form 8-K filed February 3, 2006.)                                                                     |
| 10.10   |   | Amended and Restated Letter Agreement by and between Eternal Energy Corp. and International Frontier Resources Corporation Relating to Quad 14 dated January 30, 2006. (Incorporated by reference to Exhibit 10.2 of our Current Report on Form 8-K filed February 3, 2006.)                                                            |
| 10.11   |   | Reserved for future use.                                                                                                                                                                                                                                                                                                                |
| 10.12   |   | Reserved for future use.                                                                                                                                                                                                                                                                                                                |
| 10.13   |   | Reserved for future use.                                                                                                                                                                                                                                                                                                                |
| 10.14   |   | Reserved for future use.                                                                                                                                                                                                                                                                                                                |
| 10.15   |   | Reserved for future use.                                                                                                                                                                                                                                                                                                                |
| 10.16   |   | Letter Agreement effective as of May 19, 2006, by and among Eternal Energy Corp., International Frontier Resources Corporation, Palace Exploration Company Limited, Oilexco Incorporated, and Challenger Minerals (North Sea) Limited (Incorporated by reference to Exhibit 10.1 of our Current Report on Form 8-K filed May 23, 2006). |
| 10.17   |   | Letter Agreement dated October 15, 2006, by and among Eternal Energy Corp., Fairway Exploration, LLC, Prospector Oil, Inc., and 0770890 B.C. Ltd. (Incorporated by reference to Exhibit 10.17 of our Annual Report on Form 10-KSB filed April 16, 2007).                                                                                |
| 10.18   |   | Letter Agreement dated October 26, 2006, by and among Eternal Energy Corp., Fairway Exploration, LLC, Prospector Oil, Inc., 0770890 B.C. Ltd., and Rover Resources Inc. (Incorporated by reference to Exhibit 10.18 of our Annual Report on Form 10-KSB filed April 16, 2007).                                                          |
| 10.19   |   | Letter Agreement dated February 28, 2007, by and among Eternal Energy Corp., Pebble Petroleum Inc., Emerald Bay Holdings Ltd., and Heartland Resources Inc. (Incorporated by reference to Exhibit 10.19 of our Annual Report on Form 10-KSB filed April 16, 2007).                                                                      |
| 10.20   |   | Agreement To Terminate DGWS Option (Incorporated by reference to Exhibit 10.20 of our Quarterly Report on Form 10-Q filed May 15, 2009.                                                                                                                                                                                                 |
| 10.21   |   | Employment Agreement by and between Eternal Energy Corp. and Craig Phelps dated August 1, 2007 (Incorporated by reference to Exhibit 10.21 of our Quarterly Report on Form 10-Q filed May 15, 2009).                                                                                                                                    |

----

| 10.22       |   | Employment Agreement by and between Eternal Energy Corp. and Kirk A. Stingley dated June 2, 2008 (Incorporated by reference to Exhibit 10.22 of our Quarterly Report on Form 10-Q filed May 15, 2009).                                                                                                                                                                                                                      |
|-------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 10.23       |   | Amended and Restated Employment Agreement by and between Eternal Energy Corp. and Bradley M. Colby dated November 1, 2009 (Incorporated by reference to Exhibit 10.23 of our Quarterly Report on form 10-Q filed November 23, 2009).                                                                                                                                                                                        |
| 10.24       |   | First Amendment to the Amended and Restated Employment Agreement by and between Eternal Energy Corp. and Craig H. Phelps dated August 1, 2009 (Incorporated by reference to Exhibit 10.24 of our Quarterly Report on form 10-Q filed November 23, 2009).                                                                                                                                                                    |
| 10.25       |   | First Amendment to the Employment Agreement by and between Eternal Energy Corp. and Kirk A. Stingley dated October 30, 2009 (Incorporated by reference to Exhibit 10.25 of our Quarterly Report on form 10-Q filed November 23, 2009).                                                                                                                                                                                      |
| 10.26       |   | Reserved for future use.                                                                                                                                                                                                                                                                                                                                                                                                    |
| 10.27       |   | Lease Agreement dated January 1, 2009 by and between Eternal Energy Corp. and Oakley Ventures, LLC.  (Incorporated by reference to Exhibit 10.27 of our Annual Report on Form 10-K filed March 23, 2010.)                                                                                                                                                                                                         |
| 10.28       |   | Purchase and Sale Agreement by and between Eternal Energy Corp. and Ryland Oil Corporation dated March 26, 2010.  (Incorporated by reference to Exhibit 10.28 of our Current Report on Form 8-K filed March 29, 2010.)                                                                                                                                                                                            |
| 10.29       |   | Purchase of Royalty Agreement by and between Eternal energy corp. and Ryland Oil Corporation dated March 26, 2010.  (Incorporated by reference to Exhibit 10.29 of our Current Report on Form 8-K filed March 29, 2010.)                                                                                                                                                                                          |
| 10.29a      |   | Amending Agreement to the Ryland / Eternal Royalty Purchase Agreement by and between Eternal Energy Corp. and Ryland Oil Corporation dated April 20, 2010.  (Incorporated by reference to Exhibit 10.29a of our Current Report on Form 8-K filed March 29, 2010.)                                                                                                                                                 |
| 10.30       |   | Termination Agreement (of the US Pebble Acquisition Agreement) by and between Eternal Energy Corp., Fairway Exploration LLC, Prospector Oil, Inc. Pebble Petroleum Inc. and Rover Resources Inc. dated April 29, 2010.  (Incorporated by reference to Exhibit 10.30 of our Quarterly Report on form 10-Q filed May 17, 2010.)                                                                                     |
| 10.31       |   | Termination Agreement (of the Canadian Pebble Acquisition Agreement) by and between Eternal Energy Corp., Fairway Exploration LLC, Prospector Oil, Inc. and Pebble Petroleum Inc. dated April 29, 2010.  (Incorporated by reference to Exhibit 10.31 of our Quarterly Report on form 10-Q filed May 17, 2010.)                                                                                                    |
| 10.32       |   | Termination Agreement (of the US Prospect Acquisition Agreement) by and between Eternal Energy Corp., Fairway Exploration LLC, Prospector Oil, Inc., Pebble Petroleum Inc., Rover Resources Inc., Steven Swanson, Richard L. Findley, Thomas G. Lantz and Ryland Oil Corporation dated May 11, 2010.  (Incorporated by reference to Exhibit 10.31 of our Quarterly Report on form 10-Q filed May 17, 2010.)       |
| 10.33       |   | Termination Agreement (of the Canadian Prospect Acquisition Agreement) by and between Eternal Energy Corp., Fairway Exploration LLC, Prospector Oil, Inc., Pebble Petroleum Inc., Rover Resources Inc., Steven Swanson, Richard L. Findley, Thomas G. Lantz and Ryland Oil Corporation dated May 11, 2010.  (Incorporated by reference to Exhibit 10.33 of our Quarterly Report on form 10-Q filed May 17, 2010.) |
| 10.34       |   | Termination of Management Services Agreement by and between Eternal Energy Corp., Ryland Oil Corporation and Brad Colby dated December 1, 2009.  (Incorporated by reference to Exhibit 10.34 of our Quarterly Report on form 10-Q filed May 17, 2010.)                                                                                                                                                            |
| 10.35       |   | Amendment to the consulting Agreement by and between Eternal Energy Corp., Rover Resources Inc, and Brad Colby dated April 1, 2010.  (Incorporated by reference to Exhibit 10.35 of our Quarterly Report on form 10-Q filed May 17, 2010.)                                                                                                                                                                        |
| 10.36       |   | Letter of Intent between Eternal Energy Corp. and American Eagle Energy Inc. dated February 22, 2011. (Incorporated by reference to Exhibit 10.36 of our Annual Report on form 10-K filed March 23, 2011.)                                                                                                                                                                                                                  |
| 10.37       |   | Engagement Letter for Professional Services between Eternal Energy Corp. and C.K. Cooper & Company, dated February 25, 2011.  (Incorporated by reference to Exhibit 10.37 of our Annual Report on form 10-K filed March 23, 2011.)                                                                                                                                                                            |
| 10.38       |   | Participation and Operating Agreement by and among Eternal Energy Corp., AEE Canada Inc., and Passport Energy Inc. dated April 15, 2011.  (Incorporated by reference to Exhibit 10.38 of our Registration Statement on Form S-4 filed May 4, 2011.)                                                                                                                                                               |
| 10.39* ^    |   | Purchase and Sale Agreement by and among Eternal Energy Corp., American Eagle Energy Inc. and NextEra Energy Gas Producing, LLC, dated May 17, 2011.                                                                                                                                                                                                                                                                        |
| 10.40* ^    |   | Purchase and Sale Agreement by and among Eternal Energy Corp., American Eagle Energy Inc. and NextEra Energy Gas Producing, LLC, dated May 17, 2011.                                                                                                                                                                                                                                                                        |
| 10.40a*     |   | First Amendment to the Purchase and Sale Agreement by and among Eternal Energy Corp., American Eagle Energy Inc. and NextEra Energy Gas Producing, LLC, (dated May 17, 2011) dated June 14, 2011.                                                                                                                                                                                                                           |
| 10.40b*     |   | Second Amendment to the Purchase and Sale Agreement by and among Eternal Energy Corp., American Eagle Energy Inc. and NextEra Energy Gas Producing, LLC, (dated May 17, 2011) dated July 25, 2011.                                                                                                                                                                                                                          |
| 21.1        |   | List of Subsidiaries (incorporated by reference to Exhibit 21.1 of our Annual report on Form 10-K filed April 8, 2008.)                                                                                                                                                                                                                                                                                                     |
| 31.1*       |   | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                         |
| 32.1*  |   | Certification of Chief Executive Officer pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                           |

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| ETERNAL ENERGY CORP. |                                                    |   |
|----------------------|---------------------------------------------------------|--------|
|                 |                                                    |   |
| (Registrant)         |                                                    |   |
|                 |                                                    |   |
| August 18, 2011      | /s/ Bradley M. Colby                                    |   |
|                 | Bradley M. Colby                                        |   |
|                 | President and Chief Executive Officer                   |   |
|                 | (Principal Executive, Financial and Accounting Officer) |   |

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