**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**





**FORM
        10-QSB/A**


**(Amendment
        No. 1)**





(Mark
      One)


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





**For
      the Quarterly Period Ended April 30, 2006**





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





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





**Commission
      file number: 000-51321**




**TRIANGLE
      PETROLEUM CORPORATION**


(Name
      of
      Small Business Issuer in Its Charter)





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





Suite
        1250, 521 - 3 Avenue SW


Calgary,
      Alberta


Canada
      T2P 3T3


(Address
      of Principal Executive Offices)





(403)
      262-4471


(Registrant’s
      telephone number, including area code)





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





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





Yes x No o





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





Yes o No x





As
      of
      June 1, 2006, the Company had 20,082,530 shares of its par value $0.0001 common
      stock issued and outstanding.





Transitional
      Small Business Disclosure Format (check one):





Yes o No x





**EXPLANATORY
        NOTE**





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





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





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





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


2


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




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


3


**TRIANGLE
      PETROLEUM CORPORATION**





Quarterly
      Report on Form 10-QSB for the


Quarterly
      Period Ending April 30, 2006





Table
      of
      Contents





PART
                  I. FINANCIAL INFORMATIONItem
                  1.
              Financial
                  StatementsConsolidated
                  Balance Sheets:April
                  30, 2006 (Unaudited) and January 31, 2006 (Audited)
              5Consolidated
                  Statements of Operations:Three
                  Months Ended April 30, 2006 and 2005 (Unaudited) andAccumulated
                  from December 11, 2003 (Date of Inception) to April 30, 2006
                  (Unaudited)
              6Consolidated
                  Statements of Cash Flows:Three
                  Months Ended April 30, 2006 and 2005 (Unaudited)
              7Notes
                  to Unaudited Consolidated Financial Statements:April
                  30, 2006
              8-20Item
                  2.
              Management
                  Discussion and Analysis
              21Item
                  3.
              Controls
                  and Procedures
              32PART
                  II. OTHER INFORMATIONItem
                  1.
              Legal
                  Proceedings
              34Item
                  2.
              Unregistered
                  Sales of Equity Securities and Use of Proceeds
              34Item
                  3.
              Defaults
                  Upon Senior Securities
              34Item
                  4.
              Submission
                  of Matters to a Vote of Security Holders
              34Item
                  5.
              Other
                  Information
              34Item
                  6.
              Exhibits
              34Signatures
              35


4


Triangle
      Petroleum Corporation




(An
      Exploration Stage Company)


Consolidated
      Balance Sheets


(Expressed
      in U.S. dollars except share data)





April
                  30,
                2006
                $
              
              January
                  31,
                2006
                $(unaudited)(Restated –
                Note
                  14)ASSETSCurrent
                  AssetsCash
                  and cash equivalents
              
              
              15,317,626
              
              
              17,394,422Other
                  current assets
              
              
              693,049
              
              
              406,356Total
                  Current Assets
              
              
              16,010,675
              
              
              17,800,778Debt
                  Issue Costs, net
              
              
              820,867
              
              
              903,158Property
                  and Equipment (Note 4)
              
              
              81,486
              
              
              69,266Oil
                  and Gas Properties, unproven (Note 5)
              
              
              8,257,136
              
              
              7,065,367Total
                  Assets
              
              
              25,170,164
              
              
              25,838,569LIABILITIES
                  AND STOCKHOLDERS’ DEFICITCurrent
                  LiabilitiesAccounts
                  payable
              
              
              594,064
              
              
              527,057Accrued
                  liabilities (Note 6)
              
              
              1,309,236
              
              
              1,116,613Derivative
                  liabilities (Note 8)
              
              
              25,682,883
              
              
              30,219,250Total
                  Current Liabilities
              
              
              27,586,183
              
              
              31,862,920Asset
                  Retirement Obligations (Note 5)
              
              
              33,000
              
              
              33,000Convertible
                  Debentures, less unamortized discount of $17,962,757 and $20,409,674,
                  respectively (Note 7)
              
              
              6,437,243
              
              
              4,690,326Total
                  Liabilities
              
              
              34,056,426
              
              
              36,586,246Contingencies
                  and Commitments (Notes 1, 5 and 12)Stockholders’
                  DeficitCommon
                  Stock
                Authorized:
                  100,000,000 shares, par value $0.00001
                Issued:
                  19,882,530 shares (January 31, 2006 – 19,182,530
                  shares)
              
              
              199
              
              
              192Additional
                  Paid-In Capital
              
              
              9,078,602
              
              
              7,638,741Donated
                  Capital
              
              
              11,400
              
              
              11,400Deferred
                  Compensation (Note 10)
              
              
              (3,629,168
              )
              
              (4,486,667
              )Deficit
                  Accumulated During the Exploration Stage
              
              
              (14,347,295
              )
              
              (13,911,343
              )Total
                  Stockholders’ Deficit
              
              
              (8,886,262
              )
              
              (10,747,677
              )Total
                  Liabilities and Stockholders’ Deficit
              
              
              25,170,164
              
              
              25,838,569


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


5


Triangle
      Petroleum Corporation


(An
      Exploration Stage Company)


Consolidated
      Statements of Operations


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


(unaudited)





Accumulated
                  from
                December
                  11, 2003
                (Date
                  of Inception)
                to
                  April 30,
              
              Three
                Months
                Ended
                April
                  30,
              
              Three
                Months
                Ended
                April
                  30,2006
              
              2006
              
              2005$
              
              $
              
              $(Restated
                  - Note 14)
              
              (Restated –
                Note
                  14)Revenue
              
              
              –
              
              
              –
              
              
              –Operating
                  ExpensesDepreciation
              
              
              10,397
              
              
              5,780
              
              
              –General
                  and administrative
              
              
              6,235,024
              
              
              2,149,427
              
              
              23,824Impairment
                  loss on oil and gas properties
              
              
              1,017,713
              
              
              –
              
              
              –Total
                  Operating Expenses
              
              
              7,263,134
              
              
              2,155,207
              
              
              23,824Net
                  Loss from Operations
              
              
              (7,263,134
              )
              
              (2,155,207
              )
              
              (23,824
              )Other
                  Income (Expense)Accretion
                  of discounts on convertible debentures
              
              
              (5,454,582
              )
              
              (2,446,917
              )
              
              –Amortization
                  of debt issue costs
              
              
              (134,133
              )
              
              (82,291
              )
              
              –Interest
                  income
              
              
              160,200
              
              
              108,726
              
              
              –Interest
                  on long-term debt
              
              
              (784,887
              )
              
              (396,630
              )
              
              –Unrealized
                  gain on fair value of derivatives
              
              
              16,380,506
              
              
              4,536,367
              
              
              –Total
                  Other Income (Expense)
              
              
              10,167,104
              
              
              1,719,255
              
              
              –Net
                  Loss Before Discontinued Operations
              
              
              2,903,970
              
              
              (435,952
              )
              
              (23,824
              )Discontinued
                  Operations (Note 3)
              
              
              (32,471
              )
              
              –
              
              
              (15,000
              )Net
                  Income (Loss) for the Period
              
              
              2,871,499
              
              
              (435,952
              )
              
              (38,824
              )Deficit
                  adjustment related to December 8, 2005 reclassification of warrants
                  from
                  additional paid-in capital to a derivative liability
              
              
              (17,218,794
              )Deficit
                  accumulated during the exploration stage
              
              
              (14,347,295
              )Net
                  Loss Per ShareContinuing
                  Operations – Basic and Diluted
              
              
              
              
              
              (0.02
              )
              
              –Discontinued
                  Operations – Basic and Diluted
              
              
              
              
              
              –
              
              
              –(0.02
              )
              
              –Weighted
                  Average Number of Shares Outstanding
              
              
              
              
              
              19,575,000
              
              
              46,283,000


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


6


Triangle
      Petroleum Corporation


(An
      Exploration Stage Company)


Consolidated
      Statements of Cash Flows


(Expressed
      in U.S. dollars)


(unaudited)





Three
                  Months
                Ended
                April
                  30,
              
              Three
                  Months
                Ended
                April
                  30,2006
              
              2005$
              
              $(Restated –
                Note
                  14)Operating
                  ActivitiesNet
                  loss
              
              
              (435,952
              )
              
              (38,824
              )Adjustments
                  to reconcile net loss to net cash used in operating
                  activities:Accretion
                  of discounts on convertible debentures
              
              
              2,446,917
              
              
              –Amortization
                  of debt issue costs
              
              
              82,291
              
              
              –Depreciation
              
              
              5,780
              
              
              –Stock-based
                  compensation
              
              
              1,597,368
              
              
              –Unrealized
                  loss (gain) on fair value of derivatives
              
              
              (4,536,367
              )
              
              –Changes
                  in operating assets and liabilitiesOther
                  current assets
              
              
              (286,693
              )
              
              –Accounts
                  payable and accrued liabilities
              
              
              259,629
              
              
              (25,167
              )Net
                  Cash Used in Operating Activities
              
              
              (867,027
              )
              
              (63,991
              )Investing
                  ActivitiesPurchase
                  of property and equipment
              
              
              (18,000
              )
              
              –Oil
                  and gas property expenditures
              
              
              (1,191,769
              )
              
              –Net
                  Cash Used by Investing Activities
              
              
              (1,209,769
              )
              
              –Financing
                  Activities
              
              
              –
              
              
              –Decrease
                  in Cash and Cash Equivalents
              
              
              (2,076,796
              )
              
              (63,991
              )Cash
                  and Cash Equivalents – Beginning of Period
              
              
              17,394,422
              
              
              148,102Cash
                  and Cash Equivalents – End of Period
              
              
              15,317,626
              
              
              84,111Non-cash
                  Investing and Financing ActivitiesStock
                  issued for conversion of debenture
              
              
              700,000
              
              
              –Supplemental
                  Disclosures:Interest
                  paid
              
              
              –
              
              
              –Income
                  taxes paid
              
              
              –
              
              
              –


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


7


Triangle
      Petroleum Corporation


(An
      Exploration Stage Company)


Notes
      to
      the Consolidated Financial Statements


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


(unaudited)





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




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




The
        Company has been in the exploration stage since its formation in December
        2003
        and has not yet realized any revenues from its planned operations. It is
        primarily engaged in the acquisition, exploration and development of oil
        and gas
        resource properties. The ability of the Company to emerge from the exploration
        stage with respect to planned principal business activities is dependent
        upon
        its successful efforts to raise additional equity financing and generate
        significant revenue. The Company has a
        working
        capital deficit of
        $ 11,575,508 as at
        April 30, 2006. During the year ended January 31, 2006, the Company issued
        $26,000,000 of convertible debentures. Management plans to raise additional
        capital through equity and/or debt financings. There is no guarantee that
        the
        proceeds from the financings raised by the Company, or proceeds from any
        future
        financings, will be sufficient to complete any of the above objectives. These
        factors raise substantial doubt regarding the Company’s ability to continue as a
        going concern.





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




a)
            Basis
                of Presentation




These
        financial statements and related notes are presented in accordance with
        accounting principles generally accepted in the United States, and are expressed
        in US dollars. These consolidated financial statements include the accounts
        of
        the Company and its two wholly-owned subsidiaries, Elmworth Energy Corporation,
        incorporated in the Province of Alberta, Canada, and Triangle USA Petroleum
        Corporation, incorporated in the State of Colorado, USA. All significant
        intercompany balances and transactions have been eliminated. The Company’s
        fiscal year-end is January 31.
  b)
              Use
                  of Estimates
  The
        preparation of financial statements in conformity with U.S. generally accepted
        accounting principles requires management to make estimates and assumptions
        that
        affect the reported amounts of assets and liabilities and disclosure of
        contingent assets and liabilities at the date of the financial statements
        and
        the reported amounts of revenues and expenses during the reporting period.
        Actual results could differ from those estimates.
  c)
              Cash
                  and CashEquivalents
  The
        Company considers all highly liquid instruments with maturity of three months
        or
        less at the time of issuance to be cash equivalents.
  d)
                Foreign
                    CurrencyTranslation
  The
        Company's functional currency is the United States dollar and management
        has
        adopted SFAS No. 52, “ *Foreign
        Currency Translation* ”.
        Monetary assets and liabilities denominated in foreign currencies are translated
        into United States dollars at rates of exchange in effect at the balance
        sheet
        date. Non-monetary assets, liabilities and items recorded in income arising
        from
        transactions denominated in foreign currencies are translated at rates of
        exchange in effect at the date of the transaction. Foreign currency transactions
        are primarily undertaken in Canadian dollars. The Company has not, to the
        date
        of these financials statements, entered into derivative instruments to offset
        the impact of foreign currency fluctuations.
  e)
              Interim
                  Financial Statements
  These
        interim unaudited financial statements for the period ended April 30, 2006
        have
        been prepared on the same basis as the annual financial statements and in
        the
        opinion of management, reflect all adjustments, which include only normal
        recurring adjustments, necessary to present fairly the Company’s financial
        position, results of operations and cash flows for the periods shown. The
        results of operations for such periods are not necessarily indicative of
        the
        results expected for a full year or for any future period.
  8
  Triangle
        Petroleum Corporation
 (An
        Exploration Stage Company)
 Notes
        to
        the Consolidated Financial Statements
 (Expressed
        in U.S. dollars, except as noted)
 (unaudited)
 
 **2.**
              **Summary
                  of Significant Accounting****Policies****(continued)**
  f)
              Property
                  andEquipment
  Property
        and equipment consists of computer hardware, geophysical software, furniture
        and
        equipment and leasehold improvements, and is recorded at cost. Computer hardware
        and geophysical software are depreciated on a straight-line basis over their
        estimated useful lives of three years. Furniture and equipment are depreciated
        on a straight-line basis over their estimated useful lives of five years.
        Leasehold improvements are depreciated on a straight-line basis over their
        estimated useful lives of five years.
  g)
              Long-livedAssets
  In
        accordance with SFAS No. 144, “ *Accounting
        for the Impairment or Disposal of Long-Lived Assets* ”,
        the
        carrying value of intangible assets and other long-lived assets is reviewed
        on a
        regular basis for the existence of facts or circumstances that may suggest
        impairment. The Company recognizes impairment when the sum of the expected
        undiscounted future cash flows is less than the carrying amount of the asset.
        Impairment losses, if any, are measured as the excess of the carrying amount
        of
        the asset over its estimated fair value.
  h)
              Asset
                  RetirementObligations
  The
        Company recognizes a liability for future retirement obligations associated
        with
        the Company’s oil and gas properties. The estimated fair value of the asset
        retirement obligation is based on the current cost escalated at an inflation
        rate and discounted at a credit adjusted risk-free rate. This liability is
        capitalized as part of the cost of the related asset and amortized over its
        useful life. The liability accretes until the Company settles the
        obligation.
  i)
              Oil
                  and GasProperties
  The
        Company utilizes the full-cost method of accounting for petroleum and natural
        gas properties. Under this method, the Company capitalizes all costs associated
        with acquisition, exploration and development of oil and natural gas reserves,
        including leasehold acquisition costs, geological and geophysical expenditures,
        lease rentals on undeveloped properties and costs of drilling of productive
        and
        non-productive wells into the full cost pool on a country by country basis.
        As
        of April 30, 2006, the Company had no properties with proven reserves. When
        the
        Company obtains proven oil and gas reserves, capitalized costs, including
        estimated future costs to develop the reserves proved and estimated abandonment
        costs, net of salvage, will be depleted on the units-of-production method
        using
        estimates of proved reserves. The costs of unproved properties are not amortized
        until it is determined whether or not proved reserves can be assigned to
        the
        properties. Until such determination is made the Company assesses annually
        whether impairment has occurred, and includes in the amortization base drilling
        exploratory dry holes associated with unproved properties.
  The
        Company applies a ceiling test to the capitalized cost in the full cost pool.
        The ceiling test limits such cost to the estimated present value, using a
        ten
        percent discount rate, of the future net revenue from proved reserves, based
        on
        current economic and operating conditions. Specifically, the Company computes
        the ceiling test so that capitalized cost, less accumulated depletion and
        related deferred income tax, do not exceed an amount (the ceiling) equal
        to the
        sum of: (A) The present value of estimated future net revenue computed by
        applying current prices of oil and gas reserves (with consideration of price
        changes only to the extent provided by contractual arrangements) to estimated
        future production of proved oil and gas reserves as of the date of the latest
        balance sheet presented, less estimated future expenditures (based on current
        cost) to be incurred in developing and producing the proved reserves computed
        using a discount factor of ten percent and assuming continuation of existing
        economic conditions; plus (B) the cost of property not being amortized; plus
        (C)
        the lower of cost or estimated fair value of unproven properties included
        in the
        costs being amortized; less (D) income tax effects related to differences
        between the book and tax basis of the property.
  For
        unproven properties, the Company excludes from capitalized costs subject
        to
        depletion, all costs directly associated with the acquisition and evaluation
        of
        the unproved property until it is determined whether or not proved reserves
        can
        be assigned to the property. Until such a determination is made, the Company
        assesses the property at least annually to ascertain whether impairment has
        occurred. In assessing impairment the Company considers factors such as
        historical experience and other data such as primary lease terms of the
        property, average holding periods of unproved property, and geographic and
        geologic data. The Company adds the amount of impairment assessed to the
        cost to
        be amortized subject to the ceiling test. As of April 30, 2006, all of the
        Company’s oil and gas properties were unproved and were excluded from
        amortization.
  9
  Triangle
        Petroleum Corporation
 (An
        Exploration Stage Company)
 Notes
        to
        the Consolidated Financial Statements
 (Expressed
        in U.S. dollars, except as noted)
 (unaudited)
 
 **2.**
              **Summary
                  of Significant Accounting Policies
                  (continued)**
  j)
              Debt
                  Issue Costs
  In
        accordance with the Accounting Principles Board Opinion 21 *“Interest
        on Receivables and Payables”,* the
        Company recognizes debt issue costs on the balance sheet as deferred charges,
        and amortizes the balance over the term of the related debt. The Company
        follows
        the guidance in the EITF 95-13 *“Classification
        of Debt Issue Costs in the Statement of Cash Flows”* and
        classifies cash payments for debt issue costs as a financing activity. During
        the three month period ended April 30, 2006, the Company recognized amortization
        expense of $82,291.
  k)
              Income
                  Taxes
  Potential
        benefits of income tax losses are not recognized in the accounts until
        realization is more likely than not. The Company has adopted SFAS No. 109
        “ *Accounting
        for Income Taxes* ”
as
        of
        its inception. Pursuant to SFAS No. 109 the Company is required to compute
        tax
        asset benefits for net operating losses carried forward. The potential benefits
        of net operating losses have not been recognized in these financial statements
        because the Company cannot be assured it is more likely than not it will
        utilize
        the net operating losses carried forward in future years.
  l)
              Basic
                  and Diluted Net Income (Loss) Per
                  Share
  The
        Company computes net income (loss) per share in accordance with SFAS No.
        128,
        " *Earnings
        per Share* "
        (SFAS
        128). SFAS 128 requires presentation of both basic and diluted earnings per
        share (EPS) on the face of the income statement. Basic EPS is computed by
        dividing net income (loss) available to common shareholders (numerator) by
        the
        weighted average number of shares outstanding (denominator) during the period.
        Diluted EPS gives effect to all dilutive potential common shares outstanding
        during the period including convertible debt, stock options, and warrants,
        using
        the treasury stock method, and convertible securities, using the if-converted
        method. In computing diluted EPS, the average stock price for the period
        is used
        in determining the number of shares assumed to be purchased from the exercise
        of
        stock options or warrants. Diluted EPS excludes all dilutive potential shares
        if
        their effect is anti-dilutive.
  m)
              Financial
                  Instruments
  The
        fair
        values of financial instruments, which includes cash and cash equivalents,
        other
        current assets, accounts payable, accrued liabilities and due to related
        parties
        approximate their carrying values due to the relatively short maturity of
        these
        instruments.
  n)
                Derivative
                    Liabilities
  In
          accordance with SFAS No. 133, *“Accounting
          for Derivative Instruments and Hedging Activities”* (“SFAS
          133”), as amended, and EITF Issue No. 00-19, *“Accounting
          for Derivative Financial Instruments Indexed to, and Potentially Settled
          in, a
          Company’s Own Stock”* (“EITF
          00-19”) the Company records derivatives at their fair values on the date that
          they meet the requirements of a derivative instrument and at each subsequent
          balance sheet date. Any change in fair value will be recorded as non-operating,
          non-cash income or expense at each reporting date.
  o)
              Concentration
                  of Risk
  The
        Company maintains its cash accounts in one commercial bank located in Calgary,
        Alberta, Canada. The Company's cash accounts are uninsured and insured business
        checking accounts and deposits maintained in U.S. and Canadian dollars. As
        at
        April 30, 2006, the Company has not engaged in any transactions that would
        be
        considered derivative instruments on hedging activities. To date, the Company
        has not incurred a loss relating to this concentration of credit
        risk.
  p)
              ComprehensiveLoss
  SFAS
        No.
        130, “ *Reporting
        Comprehensive Income* ,”
        establishes standards for the reporting and display of comprehensive loss
        and
        its components in the financial statements. As at April 30, 2006 and 2005,
        the
        Company has no items that represent comprehensive loss and, therefore, has
        not
        included a schedule of comprehensive loss in the financial
        statements.
  10
  Triangle
        Petroleum Corporation
 (An
        Exploration Stage Company)
 Notes
        to
        the Consolidated Financial Statements
 (Expressed
        in U.S. dollars, except as noted)
 (unaudited)
 
 **2.**
                **Summary
                    of Significant Accounting Policies
                    (continued)**
  q)
                Stock-basedCompensation
  Prior
        to
        February 1, 2006, the Company accounted for stock-based awards under the
        recognition and measurement provisions of Accounting Principles Board Opinion
        (“APB”) No. 25, “Accounting for Stock Issued to Employees” using the intrinsic
        value method of accounting, under which compensation expense was only recognized
        if the exercise price of the Company’s employee stock options was less than the
        market price of the underlying common stock on the date of grant. Effective
        February 1, 2006, the Company adopted the fair value recognition provisions
        of
        SFAS No. 123R “Share Based Payments”, using the modified prospective transition
        method. Under that transition method, compensation cost is recognized for
        all
        share-based payments granted prior to, but not yet vested as of February
        1,
        2006, based on the grant date fair value estimated in accordance with the
        original provisions of SFAS No. 123, and compensation cost for all share-based
        payments granted subsequent to February 1, 2006, based on the grant date
        fair
        value estimated in accordance with the provisions of SFAS 123R. Results for
        prior periods have not been restated.
  As
          a
          result of adopting SFAS 123R on February 1, 2006, the Company’s loss for the
          three month period ended April 30, 2006 is $112,034 higher than if it had
          continued to account for share-based compensation under APB No. 25. Basic
          and
          diluted loss per share for the three month period ended April 30, 2006
          would
          have remained unchanged at $0. 02 per
          share.
  As
        there
        were no stock options granted prior to April 30, 2005, there was no effect
        on
        net loss and loss per share if the Company had applied the fair value
        recognition provisions of SFAS No. 123 for the prior period
        presented.
  Effective
        August 5, 2005, the Company approved an incentive stock option plan (the
“2005
        Incentive Stock Plan”) to issue up to 2,000,000 shares of common stock. The 2005
        Incentive Stock Plan allows for the granting of stock options at a price
        of not
        less than fair value of the stock and for a term not to exceed five years.
        The
        total number of options granted to any person shall not exceed 5% of the
        issued
        and outstanding common stock of the Company.
  On
        February 21, 2006, the Company granted stock options under the 2005 Incentive
        Stock Plan to a director to acquire 200,000 common shares at an exercise
        price
        of $4.55 per share exercisable to February 21, 2011. The fair value for options
        granted was estimated at the date of grant using the Black-Scholes
        option-pricing model and the weighted average fair value of the stock options
        granted was $3.84 per share. On March 24, 2006, the Company granted stock
        options to a consultant to acquire 100,000 common shares at an exercise price
        of
        $3.46 per share exercisable to March 24, 2011. The fair value for options
        granted was estimated at the date of grant using the Black-Scholes
        option-pricing model and the weighted average fair value of stock options
        granted was $3.48 per share. During the three month period ended March 31,
        2006,
        the Company recorded stock-based compensation of $739,868 as general and
        administrative expense.
  A
        summary
        of the Company’s stock option activity is as follows:
 
 Three
                  Months Ended
                April
                  30, 2006Number
                  of Options
              
              Weighted
                  Average Exercise Price
                $Balance,
                  Beginning of Period
              
              
              1,330,000
              
              
              3.28Granted
              
              
              300,000
              
              
              4.19Cancelled/forfeited
              
              
              (200,000
              )
              
              3.23Balance,
                  End of Period
              
              
              1,430,000
              
              
              3.47
  Additional
        information regarding stock options as at April 30, 2006 is as
        follows:
  
 Outstanding
              
              ExercisableExercise
                  prices
                $
              
              Number
                  of
                shares
              
              Weighted
                average
                remaining
                contractual
                life
                  (years)
              
              Weighted
                average
                exercise
                  price
                $
              
              Number
                  of
                shares
              
              Weighted
                average
                exercise
                  price
                $3.23
              
              
              930,000
              
              
              4.27
              
              
              3.23
              
              
              372,000
              
              
              3.233.46
              
              
              100,000
              
              
              4.90
              
              
              3.46
              
              
              20,000
              
              
              3.463.53
              
              
              200,000
              
              
              4.45
              
              
              3.53
              
              
              100,000
              
              
              3.534.55
              
              
              200,000
              
              
              4.82
              
              
              4.55
              
              
              40,000
              
              
              4.551,430,000
              
              
              4.42
              
              
              3.47
              
              
              532,000
              
              
              3.39
  11
  Triangle
        Petroleum Corporation
 (An
        Exploration Stage Company)
 Notes
        to
        the Consolidated Financial Statements
 (Expressed
        in U.S. dollars, except as noted)
 (unaudited)
 
 **2.**
              **Summary
                  of Significant Accounting Policies
                  (continued)**
  r)
                RecentAccountingPronouncements
  In
        May
        2005, the Financial Accounting Standards Board (FASB) issued SFAS No. 154,
        “ *Accounting
        Changes and Error Corrections – A Replacement of APB Opinion No. 20 and
        SFAS No. 3* ”.
        SFAS
        154 changes the requirements for the accounting for and reporting of a change
        in
        accounting principle and applies to all voluntary changes in accounting
        principle. It also applies to changes required by an accounting pronouncement
        in
        the unusual instance that the pronouncement does not include specific transition
        provisions. SFAS 154 requires retrospective application to prior periods’
financial statements of changes in accounting principle, unless it is
        impracticable to determine either the period-specific effects or the cumulative
        effect of the change. The provisions of SFAS No. 154 are effective for
        accounting changes and correction of errors made in fiscal years beginning
        after
        December 15, 2005. The adoption of this standard did not have a material
        effect
        on the Company’s results of operations or financial position.
  In
        December 2004, FASB issued SFAS No. 153, “ *Exchanges
        of Nonmonetary Assets - An Amendment of APB Opinion No. 29* ”.
        The
        guidance in APB Opinion No. 29, “ *Accounting
        for Nonmonetary Transactions* ”,
        is
        based on the principle that exchanges of nonmonetary assets should be measured
        based on the fair value of the assets exchanged. The guidance in that Opinion,
        however, included certain exceptions to that principle. SFAS No. 153 amends
        Opinion No. 29 to eliminate the exception for nonmonetary exchanges of similar
        productive assets and replaces it with a general exception for exchanges
        of
        nonmonetary assets that do not have commercial substance. A nonmonetary exchange
        has commercial substance if the future cash flows of the entity are expected
        to
        change significantly as a result of the exchange. The provisions of SFAS
        No. 153
        are effective for nonmonetary asset exchanges occurring in fiscal periods
        beginning after June 15, 2005. Early application is permitted and companies
        must
        apply the standard prospectively. The adoption of this standard did not have
        a
        material effect on the Company’s results of operations or financial
        position.
  In
        2006,
        the FASB has issued SFAS No. 155 *“Accounting
        for Certain Hybrid Financial Instruments*–*an amendment of FASB
        Statements No. 133 and 140”* and No.
        156 *“Accounting
        for Servicing of Financial Assets*–*an amendment of FASB Statement
        No. 140”* ,
        but
        they will not have a material effect in the Company’s results of operations or
        financial position. Therefore, a description and its impact for each on the
        Company’s operations and financial position have not been
        disclosed.
  s)
                Reclassifications
  Certain
        reclassifications have been made to the prior period’s financial statements to
        conform to the current period’s presentation.
 
 **3.**
              **Discontinued
                  Operations**
  In
        December 2003, the Company, through its former President and director, acquired
        100% of the rights, title and interest in six mining claims representing
        six
        units in the Greenwood Mining Division in the Province of British Columbia,
        Canada. Payment of $1,912 was required to record these mining claims and
        paid by
        the former President of the Company. The claims were originally purchased
        by the
        former President, however, title to the claims had been conveyed to the Company
        via an unrecorded deed. During the fiscal year ended January 31, 2006, the
        Company abandoned its mineral property as a result of poor exploration
        results.
  **4.**
              **Property
                  and Equipment**
  Cost
                $
              
              Accumulated
                Depreciation
                $
              
              April
                  30,
                2006
                Net
                  Carrying
                Value
                $
              
              January
                  31,
                2006
                Net
                  Carrying
                Value
                $Computer
                  hardware
              
              
              46,301
              
              
              5,029
              
              
              41,272
              
              
              32,804Furniture
                  and equipment
              
              
              31,500
              
              
              3,388
              
              
              28,112
              
              
              29,573Geophysical
                  software
              
              
              8,000
              
              
              1,778
              
              
              6,222
              
              
              6,889Leasehold
                  Improvements
              
              
              6,083
              
              
              203
              
              
              5,880
              
              
              –91,884
              
              
              10,398
              
              
              81,486
              
              
              69,266
  12
  Triangle
        Petroleum Corporation
 (An
        Exploration Stage Company)
 Notes
        to
        the Consolidated Financial Statements
 (Expressed
        in U.S. dollars, except as noted)
 (unaudited)
 
 **5.**
              **Oil
                  and Gas Properties**
 
 The
        total
        costs incurred and excluded from amortization are summarized as follows:
 
 Acquisition
                $
              
              Exploration
                $
              
              Impairment
                Loss
                $
              
              April
                  30,
                2006
                Net
                  Carrying
                Value
                $
              
              January
                  31,
                2006
                Net
                  Carrying
                Value
                $Canadian
                  properties
              
              
              1,716,961
              
              
              2,271,178
              
              
              –
              
              
              3,988,139
              
              
              3,411,226US
                  properties
              
              
              3,860,184
              
              
              1,426,526
              
              
              (1,017,713
              )
              
              4,268,997
              
              
              3,654,141Totals
              
              
              5,577,145
              
              
              3,697,704
              
              
              (1,017,713
              )
              
              8,257,136
              
              
              7,065,367
  All
        of
        the Company’s oil and gas properties are unproven and are located in the United
        States and Canada. The Company is currently participating in oil and gas
        exploration activities in Texas and Colorado, USA, and Alberta,
        Canada.
  (a)
                On
                    October 19, 2005, the Company entered into a Participation Agreement
                    with
                    a Texas based joint venture partner to earn a 30% interest in
                    certain
                    prospects located in the Southern Fort Worth Basin, Texas. The
                    Company
                    must pay $597,600, of which $300,000 has been paid, and the balance
                    is
                    payable on October 30, 2006.
  (b)
              On
                  October 28, 2005, the Company entered into a Letter Agreement with
                  a
                  Colorado based joint venture partner to acquire a 25% working interest
                  in
                  three prospects located in Colorado, Wyoming and Montana. The Company
                  paid
                  $2,000,000 in fiscal 2006 and is committed to pay up to an additional
                  $2,492,334. The Company must pay 33.333% of the costs of drilling
                  the
                  first well, and 25% of the costs
                  thereafter.
  In
        fiscal
        2006, the Company recognized an impairment loss of $1,017,713 related to
        an
        evaluation well located on the Colorado acreage. This impairment loss includes
        $33,000 in asset retirement obligations accrued which is the Company’s estimated
        share of the costs to abandon and reclaim this well. The reclamation work
        is not
        expected to occur within the next twelve months.
  **6.**
                **Accrued
                    Liabilities**
  The
        components of accrued liabilities are as follows:
 
 April
                  30,
                2006
                $
              
              January
                  31,
                2006
                $Interest
              
              
              784,888
              
              
              388,258Oil
                  and gas expenditures
              
              
              489,348
              
              
              725,855Professional
                  fees
              
              
              35,000
              
              
              33,000Total
                  accrued liabilities
              
              
              1,309,236
              
              
              1,116,613
  **7.**
              **Convertible
                  Debentures**
  (a)
                On
                    June 14, 2005, the Company entered into a securities purchase
                    agreement
                    with a single accredited investor (*the
                    “Purchase Agreement”*)
                    pursuant to which the investor purchased an 8% convertible debenture
                    with
                    a principal amount of $1,000,000, andwarrantsto
                    purchase 1,000,000 shares of the Company’s common stock, exercisable at a
                    price of $1.00 per share until June 15, 2008. Pursuant to the
                    Purchase
                    Agreement, the investor had the right to purchase up to $5,000,000
                    of
                    additional convertible debentures and warrants to purchase 5,000,000
                    shares of common stock which was exercised on July 14, 2005,
                    in exchange
                    for an 8% convertible debenture with a principal amount of $5,000,000
                    and
                    warrants to purchase 5,000,000 shares of the Company’s common stock,
                    exercisable at a price of $1.00 per share until June 15,
                    2008.
  13
  Triangle
        Petroleum Corporation
 (An
        Exploration Stage Company)
 Notes
        to
        the Consolidated Financial Statements
 (Expressed
        in U.S. dollars, except as noted)
 (unaudited)
 
 **7.**
              **Convertible
                  Debentures (continued)**
  The
        total
        convertible debentures of $6,000,000 are due and payable on June 10, 2007.
        The
        principal and accrued interest on these convertible debentures may be converted
        into shares of the Company’s common stock at a rate of $1.00 per share, at the
        option of the holder. The investor has contractually agreed to restrict the
        ability to convert the convertible debentures to an amount which would not
        exceed the difference between the number of shares of common stock beneficially
        owned by the holder or issuable upon exercise of the warrant held by such
        holder
        and 4.99% of the outstanding shares of common stock of the Company. The
        securities were issued in a private placement transaction pursuant to Regulation
        D under the Securities Act of 1933, as amended. The Company filed an SB-2
        Registration Statement registering the resale of shares of the Company's
        common
        stock issuable upon conversion of these convertible debentures and exercise
        of
        the warrants.
  In
          accordance with EITF 98-5 *“Accounting
          for Convertible Securities with Beneficial Conversion Features or Contingently
          Adjustable Conversion Ratios”,* the
          Company recognized the value of the embedded beneficial conversion feature
          of
          $ 3,141,817 as
          additional paid-in capital and an equivalent discount which will be expensed
          over the term of the convertible debentures. In addition, in accordance
          with
          EITF 00-27 *“Application
          of Issue No. 98-5 to Certain Convertible Instruments”,* the
          Company has allocated the proceeds of issuance between the convertible
          debt and
          the detachable warrants based on their relative fair values. Accordingly,
          the
          Company recognized the fair value of the detachable warrants of $ 2,858,183 as
          additional paid-in capital and an equivalent discount against the convertible
          debentures. During the year ended January 31, 2006, the principal
          amount of $900,000 was converted into 900,000 shares of common stock. The
          unamortized discount on the converted debenture
          of $ 731,250 was
          charged to accretion expense. During the three month period ended April
          30,
          2006, a principal amount of $700,000 was converted into 700,000 shares
          of common
          stock. The unamortized discount on the converted debenture
          of $481,250 was charged to accretion expense. The Company will record interest
          expense over the term of the remaining convertible debentures of $4,400,000
          resulting from the difference between the stated value and carrying value
          at the
          date of issuance. To April 30, 2006, accrued interest of $391,737 has been
          included in accrued liabilities, and $3,525 ,000
          has
          been accreted increasing the carrying value of the convertible debentures
          to
          $1,925,000 (net of
          $1,600,000 in conversion) .
  On
          December 8, 2005, upon the issuance of the convertible debentures referred
          to in
          Note 7(b), the detachable warrants no longer met the requirements for equity
          classification. As such, the Company reversed the previous fair value recorded
          on the date of issuance in additional paid-in capital of $2,858,183 and
          recorded
          the fair value of the warrants of $31,384,800 as a derivative liability
          pursuant
          to SFAS 133 and EITF 00-19. The change in the fair value of the warrants
          from
          the date of issuance to December 8, 2005 of $28,526,617 was accounted for
          as an
          adjustment to stockholders’ equity. On April 30, 2006, the Company recorded a
          gain on the change in fair value of the derivative liability of $4,267,800
          (April 30, 2005 - $nil) and as at April 30, 2006, the fair value of the
          derivative liability was $19,353,600 (January 31, 2006 –
$23,621,400).
  (b)
              On
                  December 8, 2005, the Company entered into a Securities Purchase
                  Agreement
                  with a single investor pursuant to which the investor purchased
                  5% secured
                  convertible debentures in the aggregate principal amount of $15,000,000.
                  The gross proceeds of this financing will be received as
                  follows:
  (i)
              $5,000,000
                  was received on closing;
  (ii)
              $5,000,000
                  was received on the second business day prior to the filing date
                  of the
                  SB-2 Registration Statement; and
  (iii)
                $5,000,000
                    will be received on the fifth business day following the effective
                    date of
                    the SB-2 Registration Statement (receivedsubsequently)
  The
        Company agreed to pay an 8% fee on the receipt of each installment, and a
        $15,000 structuring fee. The convertible debentures mature on the third
        anniversary of the date of issue (the “Maturity Date”) and bear interest at 5%
        per annum. The Company is not required to make any payments until the Maturity
        Date. The investor may convert, at any time, any amount outstanding under
        the
        convertible debentures into shares of common stock of the Company at a
        conversion price per share equal to the lesser of $5.00 or 90% of the average
        of
        the three lowest daily volume weighted average prices of the common stock,
        as
        quoted by Bloomberg, LP, of the ten trading days immediately preceding the
        date
        of conversion.
  The
        Company, at its option has the right, with three business days advance written
        notice, to redeem a portion or all amounts outstanding under these convertible
        debentures prior to the Maturity Date provided that the closing bid price
        of the
        common stock is less than $5.00 at the time of the redemption. In the event
        of
        redemption, the
        Company is
        obligated to pay an amount equal to the principal amount being redeemed plus
        a
        20% redemption premium, and accrued interest.
  14
  Triangle
        Petroleum Corporation
 (An
        Exploration Stage Company)
 Notes
        to
        the Consolidated Financial Statements
 (Expressed
        in U.S. dollars, except as noted)
 (unaudited)
  **7.**
              **Convertible
                  Debentures (continued)**
  In
          connection with the Purchase Agreement, the
          Company also
          entered into a registration rights
          agreement (the
“Registration Rights
          Agreement ”)
          providing for the filing of an SB-2 Registration Statement (the “Registration
          Statement”) with the U.S. Securities and Exchange Commission (“SEC”) registering
          the common stock issuable upon conversion of the convertible debentures. The
          Company is
          obligated to use its best efforts to cause the Registration Statement to
          be
          declared effective no later than June
          30,
          2006 and to
          insure that the Registration Statement remains in effect until all of the
          shares
          of common stock issuable upon conversion of the convertible debentures
          have been
          sold. In the event of a default of its obligations under the Registration Rights
          Agreement ,
  including
          its agreement to file the Registration Statement with the SEC no later
          than January
          22, 2006 ,
          or if
          the Registration Statement is not declared effective by June
          30,
          2006 ,
          it is
          required pay to the investor, as liquidated damages, for each month that
          the
          Registration Statement has not been filed or declared effective, as the
          case may
          be, either a cash amount or shares of common stock equal to 2% of the liquidated
          value of the convertible debentures. The Company filed an SB-2 Registration
          Statement on January 18, 2006.
  The
        investor has agreed to restrict its ability to convert the convertible
        debentures and receive shares of the
        Company ’s
        common
        stock such that the number of shares of common stock held by the investor
        in the
        aggregate and its affiliates after such conversion or exercise does not exceed
        4.9% of the then issued and outstanding shares of the
        Company ’s
        common
        stock.
  In
        connection with the Securities Purchase Agreement, the
        Company and each
        of its subsidiaries executed
        security agreements (the “Security Agreements”) in favor of the investor
        granting them a first priority security interest in all of the Company’s goods,
        inventory, contractual rights and general intangibles, receivables, documents,
        instruments, chattel paper, and intellectual property. The Security Agreements
        state that if an event of default occurs under the convertible debentures
        or
        Security Agreements, the investor has the right to take possession of the
        collateral, to operate the Company’s business using the collateral, and have the
        right to assign, sell, lease or otherwise dispose of and deliver all or any
        part
        of the collateral, at public or private sale or otherwise to satisfy the
        Company’s obligations under these agreements.
  The
          Company classified the conversion features as derivative liabilities pursuant
          to
          SFAS 133 and EITF 00-19.
          As
          such, the Company
          recorded derivative liabilities (Refer to Notes 8 and 14) related to the
          convertible debentures equal to the fair values of the conversion feature of $ 7,417,339 and an
          equivalent discount on
          the
          debentures of $7,417,339. The
          carrying value of the convertible debentures will be accreted to the face
          value
          of $10,000,000 to maturity. To April 30, 2006, accrued interest of $167,123
          has
          been included in accrued liabilities and $833,692 has been
          accreted increasing the carrying value of the convertible debentures to
          $ 3,416,353.
          On April 30, 2006, the Company recorded a loss on the change in fair value
          of
          the derivative liability of $622,933 (April 30, 2005 - $nil) and as at
          April 30,
          2006, the fair value of the derivative liability was $5,505,533 (January
          31,
          2006 – $4,882,600) .
  (c)
              On
                  December 28, 2005, the Company entered into a Securities Purchase
                  Agreement with two accredited investors providing for the sale
                  bythe
                  Companyto
                  the investors of 7.5% convertible debentures in the aggregate principal
                  amount of $10,000,000 of which $5,000,000 was advanced immediately
                  and
                  1,250,000 warrants (the “Warrants”) to purchase 1,250,000 shares ofthe
                  Company’s
                  common stock, exercisable at a price of $5.00 per share untilDecember
                  28,2006,
                  of which 625,000 were issued. The second instalment of $5,000,000
                  and
                  625,000 warrants was advanced on January 18, 2006, upon the filing
                  of an
                  SB-2 Registration Statement bythe
                  Companywith the SEC.
  The
        convertible debentures mature on the third anniversary of the date of issuance
        (the “Maturity Date”) and bear interest at the annual rate of 7.5%. The
        Company is not
        required to make any payments until the Maturity Date. The investors may
        convert, at any time, any amount outstanding under the convertible debentures
        into shares of common stock of the
        Company at a
        conversion price per share of $4.00.
  In
        connection with the Securities Purchase Agreement, the
        Company also
        entered into a registration rights
        agreement (the
“Registration Rights Agreement”) providing for the filing of a registration
        statement (the “Registration Statement”) with the SEC registering the common
        stock issuable upon conversion of the convertible debentures and Warrants. The
        Company is
        obligated to use its best efforts to cause the Registration Statement to
        be
        declared effective no later than May
        28,
        2006 and to
        insure that the registration statement remains in effect until all of the
        shares
        of common stock issuable upon conversion of the convertible debentures have
        been
        sold. In the event of a default of its obligations under the Registration
        Rights
        Agreement, including its agreement to file the Registration Statement with
        the
        SEC no later than February
        26, 2006 ,
        or if
        the Registration Statement is not declared effective by June 30,
        2006 ,
        the
        Company is required pay to the investors, as liquidated damages, for each
        month
        that the Registration Statement has not been filed or declared effective,
        as the
        case may be, a cash amount equal to 1% of the liquidated value of the
        convertible debentures. The Company filed an SB-2 Registration Statement
        on
        January 18, 2006.
  Each
        investor has agreed to restrict its ability to convert the convertible
        debentures or exercise the Warrants and receive shares of the
        Company ’s
        common
        stock such that the number of shares of common stock held by them in the
        aggregate and their affiliates after such conversion or exercise does not
        exceed
        4.99% of the then issued and outstanding shares of the
        Company ’s
        common
        stock.
  15
  Triangle
        Petroleum Corporation
 (An
        Exploration Stage Company)
 Notes
        to
        the Consolidated Financial Statements
 (Expressed
        in U.S. dollars, except as noted)
 (unaudited)
 
  **7.**
                    **Convertible
                        Debentures
                        (continued)**
  In
          accordance with SFAS 133 and EITF 00-19 *,* the
          Company recognized the fair value of the warrants of $3,261,250 as a derivative
          liability (Refer to Notes 8 and 14) and an equivalent discount on the
          debentures. Also, the Company recorded the residual value of the embedded
          beneficial conversion feature of $6,738,750 as additional paid-in capital
          and an
          equivalent discount on the debentures. The carrying value of the convertible
          debentures will be accreted to the face value of $10,000,000 to maturity.
          To
          April 30, 2006, accrued interest of $226,027 has been included in accrued
          liabilities, and $1,095,890 has been accreted increasing the carrying value
          of
          the convertible debentures to $1,095,890. On April 30, 2006, the Company
          recorded a gain on the change in fair value of the derivative liability
          of
          $891,500 (April 30, 2005 - $nil) and as at April 30, 2006, the fair value
          of the
          derivative liability was $823,750 (January 31, 2006 –
$1,715,250).
  **8.**
                **Derivative
                    Liabilities**
  The
          Company evaluated the application of SFAS 133 and EITF 00-19 for the convertible
          debentures and related detachable warrants issued to investors as outlined
          in
          Note 7. SFAS 133 and EITF 00-19 require the Company to bifurcate and separately
          account for some conversion features of convertible debentures as embedded
          derivatives. They also require that when detachable warrants meet certain
          requirements that they need to be recorded as derivative liabilities. The
          Company concluded that the conversion features of the December 8, 2005
          debenture
          issuance and all warrants outstanding on that date and subsequently issued
          were
          required to be accounted for as derivatives. Pursuant to SFAS 133, the
          Company
          bifurcated the conversion feature from the December 8, 2005 debentures
          because
          the economic characteristics and risks of the conversion features were
          determined to not be clearly and closely related to the economic characteristics
          and risks of the debentures, and the number of shares issuable pursuant
          to the
          conversion features was variable. As such, the Company determined that
          the
          conversion features related to the December 8, 2005 debentures and all
          outstanding warrants met the attributes of a liability and therefore recorded
          their fair values as current liabilities. The Company is required to record
          their fair value on each balance sheet date at fair value with changes
          in the
          values of these derivatives reflected in the statement of operations. Also,
          these derivative liabilities were not previously classified as such in
          the
          Company's historical financial statements. In order to reflect these changes,
          the Company has restated its financial statements for the period ended
          April 30,
          2006 as described in Note 14.
  The
          Company uses the Black-Scholes valuation model to calculate the fair value
          of
          derivative liabilities. The following table shows the assumptions used
          in the
          calculation of the call value for the conversion features as at April 30,
          2006.
  Volatility
                
                Risk
                    Free Rate
                
                Dividend
                    Yield
                
                Term
                    in
                  YearsWeighted
                    Average Assumptions at:April
                    30, 2006
                
                
                70
                %
                
                4.87
                %
                
                –
                
                
                2.66
  The
          following table shows the assumptions used in the Black-Scholes calculation
          of
          the detachable warrants as at April 30, 2006.
  Volatility
                
                Risk
                    Free Rate
                
                Dividend
                    Yield
                
                Term
                    in
                  YearsWeighted
                    Average Assumptions at:April
                    30, 2006
                
                
                70
                %
                
                4.88
                %
                
                –
                
                
                1.88
  During
          the three month period ended April 30, 2006, the Company recorded a gain
          on
          derivatives of $4,536,367 equal to the difference in the fair value of
          the
          derivatives at January 31, 2006 and April 30, 2006.
  16
  Triangle
        Petroleum Corporation
 (An
        Exploration Stage Company)
 Notes
        to
        the Consolidated Financial Statements
 (Expressed
        in U.S. dollars, except as noted)
 (unaudited)
  
  **9.**
                **Related
                    Party Transactions**
  a)
                The
                    Company paid the former Secretary of the Company $8,000 during
                    the three
                    month period ended April 30, 2005 for consulting services provided.
                    Previously, the former Secretary provided consulting services
                    to the
                    Company valued at $250 per month. No amounts were recognized
                    for donated
                    services for the three month period ended April 30,
                    2005.
  b)
              During
                  the three month period ended April 30, 2006, the Company paid $5,000
                  in
                  director’s fees.
  c)
                Effective
                    September 1, 2005, the Company agreed to pay $10,700 per month
                    for
                    management services provided by the President of the Company.
                    This
                    agreement wasterminated
                    January 31, 2006, andeffective February 1, 2006, the Company agreed to pay a salary
                    of
                    Cdn$12,000 per month to the President of the Company. During
                    the three
                    month period ended April 30, 2006,$31,296
                    (Cdn$36,000)was charged to operations.
  d)
              On
                  June 23, 2005, the Company entered into a management consulting
                  agreement
                  with the President of the Company’s subsidiary. Under the terms of the
                  agreement, the Company must pay $20,000 per month for an initial
                  term of
                  two years, and, unless notice of termination is given by either
                  party, is
                  automatically renewed for one year periods. During the three month
                  period
                  ended April 30, 2006, $60,000 was charged to operations.
  e)
                On
                    November 14, 2005, the Company entered into a management consulting
                    agreement with the Chief Financial Officer of the Company. Under
                    the terms
                    of the agreement, the Company must pay $10,000 per month, as
                    well as an
                    annual bonus based upon mutually agreed upon targets.Thisagreementterminated
                    December 31, 2005, and effective January 1, 2006, theCompany
                    agreed to pay a salary of$10,000
                    per month to the Chief Financial Officer. During the three month
                    period
                    ended April 30, 2006,$30,000
                    was charged to operations.
  f)
              As
                  at April 30, 2006, the Company was indebted to the President of
                  the
                  Company in the amount of $2,680 (January 31, 2006 - $1,397), which
                  is
                  included in accounts payable. This amount is for reimbursable business
                  expenses incurred on behalf of the
                  Company.
 
 **10.**
                **Common
                    Stock**
  (a)
              In
                  March 2006, the Company issued 700,000 shares of common stock upon
                  the
                  conversion of convertible debentures with a principal amount of
                  $700,000.
  (b)
              On
                  June 2, 2005, the Company issued 2,000,000 shares of common stock
                  to the
                  President of the Company’s subsidiary at $0.01 per share for cash proceeds
                  of $20,000. As the shares were issued for below fair value, a discount
                  on
                  the issuance of shares of $2,700,000 was recorded as deferred
                  compensation. During the year ended January 31, 2006, $900,000
                  was charged
                  to operations. During the three month period ended April 30, 2006,
                  $337,500 was charged to operations. The remaining amount of $1,462,500
                  in
                  deferred compensation will be amortized over the remainder of the
                  President’s two year employment
                  contract.
  (c)
              On
                  May 16, 2005, the Company issued 4,000,000 shares of common stock
                  to the
                  President of the Company at $0.01 per share for cash proceeds of
                  $40,000.
                  As the shares were issued for below fair value, a discount on the
                  issuance
                  of shares of $4,160,000 was recorded as deferred compensation.
                  During the
                  year ended January 31, 2006, $1,473,333 was charged to operations.
                  During
                  the period ended April 30, 2006, $520,000 was charged to operations.
                  The
                  remaining amount of $2,166,667 in deferred compensation will be
                  amortized
                  over the remainder of the President’s two year employment
                  contract.
 
 **11.**
                **Share
                    Purchase Warrants**
  As
        at
        April 30, 2006, the following share purchase warrants were
        outstanding:
 
 Number of
                Warrants
              
              Exercise Price
              
              Expiry Date6,000,000
              
              $
              1.00
              
              
              June 15, 2008625,000
              
              $
              5.00
              
              
              December 28, 2006625,000
              
              $
              5.00
              
              
              January 23, 20077,250,000
  17
  Triangle
        Petroleum Corporation
 (An
        Exploration Stage Company)
 Notes
        to
        the Consolidated Financial Statements
 (Expressed
        in U.S. dollars, except as noted)
 (unaudited)
 
 **12.**
                **Commitment**
  On
        July
        19, 2005, the Company entered into a lease agreement commencing October 1,
        2005
        for office premises for a four year term expiring September 30, 2009. Annual
        rent is payable at $32,972 (Cdn$36,816) for the first two years and $34,663
        (Cdn$38,704) for the remaining two years. The Company must also pay its share
        of
        occupancy costs, currently at an annual rate of $18,042 (Cdn$20,145). During
        the
        three month period ended April 30, 2006, the Company paid rent expense of
        $13,211. Future minimum lease payments over the next five fiscal years are
        as
        follows:
 
 2007
              
              $
              51,0002008
              
              $
              51,0002009
              
              $
              53,0002010
              
              $
              35,000$
              190,000
  **13.**
                **Subsequent
                    Event**
 
 On
          May
          26, 2006, the Company issued 200,000 shares of common stock upon the conversion
          of a convertible debenture with a principal amount of
          $200,000.
 
 On
          June
          1, 2006, the Company received the final $5,000,000 disbursement relating
          to the
          convertible debenture referred to in Note 7(b).
 
  **14.**
                **Restatement**
  The
          Company has restated its consolidated financial statements for the fiscal
          period
          ended April 30, 2006 to reflect additional non-operating gains and losses
          related to the classification of and accounting for convertible debentures
          issued in fiscal 2006. The Company had previously recorded a beneficial
          conversion feature, measured using the intrinsic value method, and detachable
          warrants, measured using the Black Scholes fair value method, and recorded
          them
          to additional paid in capital on a relative fair value basis. Upon further
          review, the Company has determined that the conversion features of the
          convertible debentures issued pursuant to the December 8, 2005 Security
          Purchase
          Agreement (refer to Note 7(b)) and the warrants issued pursuant to the
          June 14,
          2005 and December 28, 2005 Securities Purchase Agreements (refer to Notes
          7(a)
          and (c) respectively) should have been classified as derivative liabilities
          pursuant to SFAS No. 133 and EITF No. 00-19. In addition, the Company has
          revised the fair value of the conversion features recorded with the convertible
          debentures issued pursuant to the December 28, 2005 Securities Purchase
          Agreement. The accounting treatment of derivative financial instruments
          requires
          that the Company record the derivatives at their fair values as of the
          inception
          date and at their fair values as of each subsequent balance sheet date.
          At the
          date of the conversion of each respective instrument or portion thereof,
          the
          corresponding derivative liability will be reclassified as
          equity.
  18
  Triangle
        Petroleum Corporation
 (An
        Exploration Stage Company)
 Notes
        to
        the Consolidated Financial Statements
 (Expressed
        in U.S. dollars, except as noted)
 (unaudited)
  **14.
           Restatement (continued)**
  The
          accompanying consolidated financial statements for the period ended April
          30,
          2006 have been restated to effect the changes described above as
          follows:
  April
                      30, 2006
                    As
                      Reported
                    $
                  
                  Adjustment
                    $
                  
                  April
                      30, 2006
                    As
                      Restated
                    $Consolidated
                      Balance SheetCurrent
                      LiabilitiesDerivative
                      liabilities
                  
                  
                  –
                  
                  
                  (4,536,367
                  ) (a)30,219,250
                  (c)
                  
                  25,682,883Long-Term
                      LiabilitiesConvertible
                      Debentures
                  
                  
                  10,658,177
                  
                  
                  395,043
                  (b)(4,615,977
                  ) (c)
                  
                  6,437,243Stockholders’
                      DeficitAdditional
                      Paid-In Capital
                  
                  
                  29,062,971
                  
                  
                  (19,984,369
                  ) (c)
                  
                  9,078,602Deficit
                      Accumulated During the Development Stage
                  
                  
                  (12,869,715
                  )
                  
                  4,536,367
                  (a)(395,043
                  ) (b)(5,618,904
                  ) (c)
                  
                  (14,347,295
                  )
  (a)
                To
                    record change in fair values of derivative
                    liabilities.
  (b)
                To
                    record effect of fair value of conversion features and detachable
                    warrants
                    on accretion.
  (c)
                To
                    record cumulative effect of prior period
                    restatements.
  Three
                    Months
                  Ended
                  April
                    30, 2006
                  As
                    Reported
                  $
                
                Adjustment
                  $
                
                Three
                    Months
                  Ended
                  April
                    30, 2006
                  As
                    Restated
                  $Consolidated
                    Statement of OperationsAccretion
                    of discounts on convertible debentures
                
                
                (2,051,874
                )
                
                (395,043
                ) (a)
                
                (2,446,917
                )Unrealized
                    loss on fair value of derivatives
                
                
                –
                
                
                4,536,367
                (b)
                
                4,536,367Net
                    loss for the year
                
                
                (4,577,276
                )
                
                (395,043
                ) (a)4,536,367
                (b)
                
                (435,952
                )Net
                    Loss Per Share – Basic and Diluted
                
                
                (0.23
                )
                
                
                
                
                (0.02
                )
  (a)
                To
                    record effect of fair value of conversion features and detachable
                    warrants
                    on accretion.
  (b)
                To
                    record loss on derivatives based upon fair values as at April
                    30,
                    2006.
  19
  Triangle
        Petroleum Corporation
 (An
        Exploration Stage Company)
 Notes
        to
        the Consolidated Financial Statements
 (Expressed
        in U.S. dollars, except as noted)
 (unaudited)
  **14.
          Restatement (continued)**
 
 Accumulated
                    from December 11, 2003
                  (Date
                    of Inception) to
                  April
                    30, 2006
                  As
                    Reported
                  $
                
                Adjustment
                  $
                
                Accumulated
                    from December 11, 2003
                  (Date
                    of Inception) to
                  April
                    30, 2006
                  As
                    Restated
                  $Consolidated
                    Statement of OperationsAccretion
                    of discounts on convertible debentures
                
                
                (4,815,290
                )
                
                (395,043
                ) (a)(244,249
                )(c)
                
                (5,454,582
                )Unrealized
                    gain on fair value of derivatives
                
                
                –
                
                
                4,536,367
                (b)11,844,139
                (c)
                
                16,380,506Net
                    income (loss) for the period
                
                
                (12,869,715
                )
                
                (395,043
                ) (a)4,536,367
                (b)11,599,890
                (c)
                
                2,871,499
  (a)
                To
                    record effect of fair value of conversion features and detachable
                    warrants
                    on accretion.
  (b)
                To
                    record loss on derivatives based upon fair values as at April
                    30,
                    2006.
  (c)
                To
                    record cumulative effect of prior period
                    restatements.
  Adjustments
          related to the accounting for the convertible
          debentures and derivative liabilities for the period ended April 30, 2006
          did
          not have an effect on the Consolidated Statements of Cash Flows. Although
          some
          line items within the net cash used in operating activities changed, the
          net
          cash used in operating activities did not change.
  20
  **ITEM
        2. MANAGEMENT'S DISCUSSION AND ANALYSIS** **OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS**
  
 The
        following discussion contains forward-looking statements that are subject
        to
        significant risks and uncertainties about us, our current and planned projects,
        our current and proposed marketing and sales, and our projected results of
        operations. There are several important factors that could cause actual results
        to differ materially from historical results and percentages and results
        anticipated by the forward-looking statements. The Company has sought to
        identify the most significant risks to its business, but cannot predict whether
        or to what extent any of such risks may be realized nor can there be any
        assurance that the Company has identified all possible risks that might arise.
        Investors should carefully consider all of such risks before making an
        investment decision with respect to the Company's stock. The following
        discussion and analysis should be read in conjunction with the financial
        statements of the Company and notes thereto. This discussion should not be
        construed to imply that the results discussed herein will necessarily continue
        into the future, or that any conclusion reached herein will necessarily be
        indicative of actual operating results in the future. Such discussion represents
        only the best present assessment from our Management.
  **Overview**
 
 Prior
        to
        May 2005, we were known as Peloton Resources Inc., a mining exploration company.
        Peloton was actively searching for ore bodies containing gold in British
        Columbia. A consultant was hired to assess the economic viability of exploring
        for and developing gold reserves on Peloton’s properties. Based upon his report,
        Peloton decided to abandon all mining activities and to commence shifting
        towards an oil and gas exploration company. In connection with the shift
        in
        operational focus, we changed our name to Triangle Petroleum
        Corporation.
 
 The
        changeover from a mining to an oil and gas exploration company has taken
        place
        over the last year, during one of the strongest bull markets for oil and
        natural
        gas. The average monthly price for West Texas Intermediate (WTI) crude oil
        and
        natural gas (Henry Hub Nymex), currently, as compared to the prior year,
        is as
        follows:
 
 **Month
                  and**
                **Year**
              
              **Oil
                  price**
                **per**
                **barrel**
              
              **Natural
                  Gas**
                **price
                  Henry**
                **Hub
                  Nymex**
                **(US$/mmbtu)**
              
              **Month
                  and Year**
              
              **Natural
                  Gas**
                **price
                  Henry**
                **Hub
                  Nymex**
                **(US$/mmbtu)**
              
              **Oil
                  price**
                **per**
                **barrel**May
                  2005
              
              $
              49
              
              $
              6.75
              
              May
                2004
              
              $
              5.94
              
              $
              40June
                  2005
              
              $
              57
              
              $
              6.12
              
              June
                2004
              
              $
              6.68
              
              $
              38July
                  2005
              
              $
              59
              
              $
              6.98
              
              July
                2004
              
              $
              6.14
              
              $
              40August
                  2005
              
              $
              65
              
              $
              7.65
              
              August
                2004
              
              $
              6.05
              
              $
              44September
                  2005
              
              $
              66
              
              $
              10.85
              
              September
                2004
              
              $
              5.08
              
              $
              46October
                  2005
              
              $
              62
              
              $
              13.91
              
              October
                2004
              
              $
              5.72
              
              $
              53November
                  2005
              
              $
              58
              
              $
              13.83
              
              November
                2004
              $
              7.63
              
              $
              48December
                  2005
              
              $
              59
              
              $
              11.18
              
              December
                2004
              
              $
              7.98
              
              $
              43January
                  2006
              
              $
              66
              
              $
              11.43
              
              January
                2005
              
              $
              6.21
              
              $
              47February
                  2006
              
              $
              62
              
              $
              8.40
              
              February
                2005
              
              $
              6.29
              
              $
              48March
                  2006
              
              $
              63
              
              $
              7.11
              
              March
                2005
              
              $
              6.30
              
              $
              54April
                  2006
              
              $
              70
              
              $
              7.23
              
              April
                2005
              
              $
              7.32
              
              $
              53
 
 This
        is
        consistent with most oil and gas analysts calling for continued high commodity
        prices due to strong or rising demand in the United States, China and India
        relative to regular supply disruptions in the Middle East, Gulf Coast states
        and
        other areas. Although these strong commodity prices have resulted in extremely
        competitive conditions for the supply of products and services for exploration
        companies, our outlook remains positive. Despite these strong fundamentals,
        it
        should be noted that short term fluctuations in North American natural gas
        prices will occur based upon seasonal weather patterns and gas storage levels.
  21
  Since
        August 2005, we have undertaken the following major initiatives:
 
 ●
              Contracted
                  the services of an experienced geo science team, an experienced
                  landman
                  and hired a chief financial
                  officer;
 ●
              Participated
                  in drilling four deep basin gas wells in northwestern
                  Alberta;
 ●
              Reached
                  an agreement with Kerogen Resources Inc. to pursue opportunities
                  relating
                  to the Barnett Shale Project in the Greater Fort Worth area of
                  East
                  Texas;
 ●
              Reached
                  an agreement with Hunter Energy Exploration, Inc. to explore approximately
                  64,000 acres of mineral rights in three prospect areas in Colorado,
                  Wyoming and Montana;
 ●
              Participated
                  in drilling our first well in the United States with Hunter Energy
                  in
                  Colorado;
 ●
              Completed
                  $25 million funding;
 ●
              Established
                  initial acreage position in the Barnett Shale Project with participation
                  in the purchase of 2,600 acres;
 ●
              Participated
                  in drilling a three well program in the Barnett Shale Project located
                  in
                  Texas;
 ●
              Increased
                  the initial acreage position in the Barnett Shale Project from
                  2,600 acres
                  to 7,500 acres;
 ●
              Participated
                  in drilling a second well in the Barnett Shale Project located
                  in Texas;
 ●
              Finished
                  acquisition phase of 3-D seismic program on initial acreage position
                  in
                  the Barnett Shale Project;
 ●
              Increased
                  acreage position in the Barnett Shale Project from 7,500 acres
                  to 9,500
                  acres; and
 ●
              Executed
                  farm-in agreement on a 500,000 acre land block with a Canadian
                  joint
                  venture partner to explore unconventional gas opportunities in
                  Canada.
 
 **Plan
        of Operations**
 
 We
        believe that there are six critical elements for building a successful oil
        and
        gas exploration company in the current environment:
 
 1.
              People –
                  this includes a qualified board of directors, advisory board members,
                  management, employees, and
                  consultants;
 2.
              Projects –
                  a credible portfolio of projects that have the appropriate risk-return
                  ratio in order to generate potentially significant shareholder
                  value;
 3.
              Capital –
                  based upon the reputation of the people and the quality of the
                  projects,
                  there must be sufficient capital in order to launch the company
                  and to
                  provide for additional fundings;
 4.
              Technology –
                  the most advanced interpretation methods, techniques and methods
                  should be
                  utilized in order to maximize the potential for finding and developing
                  oil
                  and gas reserves;
 5.
              Land
                  position – the competitive nature of the oil and gas industry
                  requires a combination of approaches in order to secure sufficient
                  land
                  positions to explore for oil and gas;
                  and
 6.
              Drilling
                  capability – the competitive nature of the oilfield service industry
                  requires a unique approach and a significant capital commitment
                  in order
                  to secure a drilling rig in today’s
                  marketplace.
 
 **People:**
 
 In
        late
        May 2005 Mark Gustafson was hired as our President, Chief Executive Officer
        and
        director with a mandate to aggressively transform us into an emerging oil
        and
        gas exploration company. In June 2005, we recruited two additional directors,
        John Carlson (engineer) and Ron Hietala (petrophysicist). Mr. Hietala was
        then
        retained as the President and director of our Alberta operating subsidiary,
        Elmworth Energy Corporation. On October 27, 2005, Mr. Hietala’s role was further
        expanded to include being appointed President of Triangle USA Petroleum
        Corporation. Mr. Hietala’s specific mandate is to build a complete organization
        under his direction in Elmworth and Triangle USA based upon his 30 years
        experience in the oil and gas industry. Specifically, Mr. Hietala’s 19 year
        career and contacts at Canadian Hunter Exploration Ltd. continues to be critical
        in order to attract qualified employees and consultants for Elmworth and
        Triangle USA. In November 2005, we hired Aly Musani as our Chief Financial
        Officer to oversee all of our financial operations. In March 2006, Mr. Musani’s
        role was expanded as he was appointed to the role of Secretary and
        Treasurer.
 
 We
        have
        contracted several significant additions to the operating team in Elmworth
        based
        upon Mr. Hietala’s contacts, including landmen, geologists, geophysicists and
        engineers. We added Mr. Clarence Campbell, an industry recognized clastic
        sedimentologist and stratigrapher, who has worked extensively both domestically
        and internationally. Mr. Campbell’s practical, hands on experience in Western
        Canada is a strong asset to the integrated geological and geophysical projects.
        Another addition to the geoscience team is Mr. Arthur Bowman. Mr. Bowman
        received a BSc. from University of Toronto in 1977 and began his geophysical
        career in Calgary with Chevron Canada Resources Ltd. At Chevron, Mr. Bowman
        worked as an interpreter on various projects in Alberta and North Eastern
        British Columbia. More recently, Mr. Bowman was a founder of Defiant Energy
        Corp. The company commenced operations in 1998 and established production
        of
        3,500 barrels of oil equivalent per day until the company was sold to Advantage
        Energy Trust in 2004. Mr. Bowman acted as geophysicist, geologist and
        Vice-President of Exploration. The Elmworth geoscience team was complemented
        by
        the addition of an experienced landman, Mr. Neil McPherson. Mr. McPherson
        brings
        thirty-six years of land expertise to Elmworth. Mr. McPherson began his career
        in the land department of Mobil Oil Canada Ltd. He was actively involved
        in both
        surface and mineral land issues. Subsequent to this, he has held a variety
        of
        senior and executive positions with companies such as Sundance Oil Canada
        Ltd.,
        Covenant Resources Ltd., Oakwood Petroleum, Morgan Hydrocarbons, Mannville
        Oil
        and Gas Ltd. and High Point Resources Inc. We recently retained the services
        of
        an experienced Calgary based executive search firm in order to secure the
        services of a qualified candidate for the position of Chief Operating Officer.
        We expect this position to be filled within the next one to two
        months.
  22
  In
        addition, we added Stephen A. Holditch to our board of directors. Since January
        2004, Mr. Holditch has been the Head of the Department of Petroleum Engineering
        at Texas A&M University. Since 1976 through the present, Mr. Holditch has
        been a faculty member at Texas A&M University, as an Assistant Professor,
        Associate Professor, Professor and Professor Emeritus. Since its founding
        in
        1977 until 1997, when it was acquired by Schlumberger Technology Corporation,
        Mr. Holditch was the Founder and President of S.A. Holditch & Associates,
        Inc., a petroleum
        technology company providing analysis of low permeability gas reservoirs
        and
        designing hydraulic fracture treatments. Mr. Holditch previously worked for
        Shell Oil Company and Pan American Petroleum Corporation. Mr. Holditch is
        a
        registered professional engineer in Texas, has received numerous honors,
        awards
        and recognitions and has authored or co-authored over 100 publications on
        the
        oil and gas industry. Mr.
        Holditch received his B.S., M.S. and Ph.D. in Petroleum Engineering from
        Texas
        A&M University in 1969, 1970 and 1976, respectively. We continue to seek
        additional qualified candidates to join our Board of Directors.
 
 We
        do not
        intend to hire a significant number of employees over the next twelve months,
        as
        we intend to utilize our strong industry contacts with top quality consultants
        and contractors.
 
 **Projects:**
 
 During
        the quarter ended April 30, 2006, we further refined our strategic plan and
        have
        determined that the maximum value to all of our stakeholders is best served
        by
        targeting three focused project areas that provide geographical diversification
        and acceptable returns for invested capital. The three major project areas
        are
        as follows:
 
 *Barnett
        Shale Project*–*Greater Fort Worth Basin,
        Texas*
 
 Through
        our operating subsidiary, Triangle USA Petroleum Corporation, we have a 30%
        interest in a large joint venture area in the Barnett Shale of the Greater
        Fort
        Worth Basin. The joint venture was established through a strategic relationship
        with Kerogen Resources of Houston, Texas.
 
 The
        Barnett Shale trend was pioneered by Mitchell Energy starting in 1981.
        Commercialization of the project was slow to occur until the application
        of
        large water fracturing stimulations at the Newark East Field in 1997. A second
        technology breakthrough occurred with the application of horizontal wells
        and
        selective stimulations. The Barnett Shale trend now supports daily production
        in
        excess of 1.2 bcf per day of natural gas with the USGS (United States Geological
        Survey) estimating a resource potential of greater than 25 tcf (trillion
        cubic
        feet) of natural gas. The Barnett Shale trend is the largest gas field in
        Texas
        with the productive limits being expanded regularly. Triangle USA has entered
        into the Barnett Shale trend through a joint venture with Kerogen Resources
        Inc.
        of Houston, Texas. Kerogen’s focus is to identify and exploit present and future
        shale gas projects within the United Sates and internationally. The principals
        of Kerogen also have many years of shale gas evaluation experience coupled
        with
        active involvement in the drilling, completion and production phases of Barnett
        Shale gas. Triangle USA, along with the joint venture partners, have commenced
        a
        land acquisition phase in the Fort Worth Basin (Texas). To
        date,
        9,500 acres have been secured through the Kerogen joint venture. A ten square
        mile initial 3-D seismic program has been designed. It is anticipated the
        data
        will be processed and interpreted by the end of June 2006. Drilling targets
        will
        then be selected and prioritized based on availability of drilling services
        and
        equipment. Well spacing for the Barnett Shale ranges from 40 to 100 acres
        across
        the productive areas. Triangle
        USA believes the Barnett Shale trend to be an exploration opportunity that
        will
        continue to benefit from the application of new technology and sound field
        procedures.
 
 Triangle
        USA is also currently participating in the drilling of three Barnett Shale
        wells
        in the Greater Fort Worth Basin. The wells are anticipated to be an extension
        of
        the productive trend. The drilling and completion program is a pilot project
        for
        a new completion technique designed to access incremental reserves and to
        establish higher levels of initial well productivity. Triangle USA has a
        6.75%
        working interest in the project. The three horizontal wells in this multi-well
        project have been drilled to the projected total depth. The timing of the
        stimulation will be coordinated with the construction of pipeline and production
        facilities. Stimulation procedures and techniques developed in this first
        pilot
        project will be applied to the significant land block currently held by Triangle
        USA and its partner group.
  23
  Triangle
        USA’s third project in Johnson County has completed drilling operations. The
        well has been multi-stage fracture stimulated and is currently being flow
        tested. This well is located in the active development area of the Barnett
        Shale. Triangle USA Petroleum has a 6% working interest in this Johnson County
        project.
 
 Triangle
        USA along with its joint venture partner, Kerogen, will also evaluate other
        shale gas projects outside of the Greater Fort Worth Basin.
 
 *West
        Central Alberta Deep Basin Opportunities*
 
 Based
        upon Mr. Hietala’s successful career at Canadian Hunter Exploration Ltd. in
        developing natural gas in northwestern Alberta (Deep Basin), our board decided
        in June 2005 to consider exploring for natural gas in this area. In order
        to
        confirm the potential upside for Elmworth in exploring for natural gas in
        this
        area, two consulting firms were engaged. Calgary based Sproule Associates
        Limited prepared an independent geological assessment of the target area
        in June
        and concluded that there was approximately 820 bcf (billion cubic feet) of
        discovered and undiscovered recoverable raw gas remaining to be produced
        from
        the targeted horizons. In July 2005, Calgary based Petrel Robertson Consulting
        Ltd. prepared a broader geological resource assessment of this target area
        and
        concluded that the estimated gas in place is approximately 2,000 bcf. Based
        upon
        Mr. Hietala’s experience and these two reports, we have decided to explore these
        zones.
 
 In
        October 2005, Elmworth participated in a 2,500 meter (8,250 feet) drilling
        project in the Deep Basin of West Central Alberta. This first evaluation
        well
        allowed us to earn the right to drill in five additional sections of land
        (approximately 3,200 acres). Elmworth has paid 38.5% of the costs. A hydraulic
        fracture stimulation program was performed on the exploration target identified
        by the operator. Commercial quantities of gas have not been tested from this
        well to date. However, Elmworth acquired proprietary well log data from this
        location that will be used to interpret the extensive 3-D seismic data currently
        under review. This land block held by Elmworth is currently being assessed
        for
        additional drilling locations.
 
 In
        November 2005, Elmworth participated in a joint venture which targeted
        exploration opportunities in the south Deep Basin area of Alberta. 23 sections
        of land (approximately 14,700 acres) were earned upon the drilling of three
        commitment wells. Elmworth is participating for a 25% working interest in
        the
        first well. The first well was rig released in early December. A hydraulic
        fracture stimulation program was initiated on the Upper Cretaceous exploration
        targets. The primary horizon was not productive although a shallower interval
        is
        scheduled for completion. The second well is currently being evaluated for
        completion by the operator while the third well was plugged back to a shallower
        horizon. A completion program for the second well is currently under review
        with
        field work scheduled to commence summer.
 
 *Hunter
        Energy Joint Venture Opportunity*
 
 On
        October 31, 2005 we executed a joint venture agreement with Hunter Energy
        of
        Denver Colorado for a 25% working interest in three project areas. The joint
        venture currently has approximately 64,000 acres of mineral rights in three
        prospect areas in Colorado, Wyoming and Montana. At least one well will be
        drilled in each area. Triangle USA has committed a minimum of $4.5 million
        to
        this joint venture. Based upon the results of the initial exploratory program,
        we have the option to participate in additional land acquisitions and drilling
        programs. Hunter has a unique exploration team whose members are led by Mr.
        John
        Masters, a co-founder of Canadian Hunter Exploration Limited. Canadian Hunter
        pioneered the exploration concepts of pervasive gas saturated reservoir
        accumulations that today are known as Basin Centered Gas Fields. The
        observations and the technical understanding led by John Masters and the
        Canadian Hunter team have resulted in multi-TCF’s (trillion cubic feet) of gas
        being produced to date in the Western Canadian Sedimentary Basin. The greater
        Deep Basin today continues to be a cornerstone in the asset base of many
        Canadian and international companies. Hunter has a team of 11 petroleum
        technology experts and 12 associated staff, several of whom were trained
        at
        Canadian Hunter. The business environment of the Rocky Mountain basins is
        attractive to establishing new projects, due to the fact that land costs,
        drilling density and hydrocarbon potential are all favorable in the areas
        selected by the experienced team at Hunter.
  24
  Triangle
        USA Petroleum Corporation has a 25% working interest in the joint venture
        properties comprised of 64,000 acres of mineral rights in three prospect
        areas
        in Colorado, Wyoming and Montana. The first exploration test well in Colorado
        was drilled in November 2005, the first evaluation of well logs and drill
        cuttings indicated that the well encountered the targeted objective as planned.
        The drilling rig finished operations in early January, successfully drilling
        to
        the target formations. The completion rig for the exploration test located
        in
        northwest Colorado was released in the middle of March and all technical
        and
        operational data gathered to date has not established the presence of commercial
        hydrocarbons. Triangle USA has reviewed the operator’s technical assessment of
        the exploration test. Triangle USA will also work with Hunter Energy to evaluate
        other hydrocarbon opportunities on the large land block that has been earned
        by
        the drilling of this first well.
 
 **Capital:**
 
 Based
        upon a new board of directors and an exploration program for Elmworth, we
        were
        able to secure a $6 million convertible debenture financing. The first tranche
        of $1 million was received in June 2005 and the balance of $5 million was
        received in July 2005. This funding was completed with one accredited investor
        and with no fees, other than legal costs to prepare a registration statement.
        This financing allowed us to proceed in the execution of our operating
        plan.
 
 In
        anticipation of the significant funds required to undertake the projects
        mentioned above and to acquire additional seismic data, acquire land positions,
        and launch drilling programs, we anticipated that we would require approximately
        $25 million in additional funding. We have secured a $15 million funding
        commitment from one institutional investor with gross proceeds of $10 million
        having been received prior to January 31, 2006. The final $5 million was
        received subsequent to the quarter end. We have also secured a $10 million
        funding commitment from two institutional investors with all gross proceeds
        having been received prior to January 31, 2006.
 
 **Technology:**
 
 One
        of
        the keys to finding natural gas is the use of available resources and advanced
        technological methods. In June 2005, Elmworth acquired new, high quality
        three
        dimensional seismic data covering 30 square miles in northwestern Alberta.
        This
        initial seismic data has been interpreted by the experienced team of geologists
        and geophysicists. This review was finalized during the first fiscal quarter
        of
        2006. **** The
        initial objective here was to identify preliminary locations to target within
        the selected area. The acquired seismic will be used to establish opportunities
        in this multi-horizon area. We have recently made an additional seismic purchase
        in order to continue the interpretation and drilling location selection process.
        In addition to state of the art seismic interpretation, Elmworth will utilize
        advanced reservoir analysis techniques and the technical experience of its
        geological and geophysical team to further the opportunity identification
        process.
  Elmworth
        has concluded two strategic technology partnerships. The first initiative
        is
        with the Department of Geophysics at the Colorado School of Mines under its
        Reservoir Characterization Project. This highly regarded, industry sponsored
        project, is developing advanced techniques to identify production from “Basin
        Centered” gas accumulations similar to the projects being pursued by Elmworth in
        the Alberta Deep Basin and also by Hunter Energy in the Rocky Mountain areas
        of
        the United States. The second initiative is with the Department of Geophysics
        at
        Stanford University. This project should provide Elmworth with key expertise
        related to seismic attribute analysis. Seismic attribute analysis is believed
        to
        provide new insights that will be used to identify drilling opportunities
        in the
        extensive 3-D seismic surveys being acquired by Elmworth in the Deep Basin.
        The
        strategic technology initiatives should support the Elmworth geo-science team
        and allow the team to focus on opportunity identification and land acquisition.
  25
  **Land:**
 
 There
        are
        four different methods to acquire or participate in the leasing of oil and
        gas
        rights under the land in the target area:
 
 (a)
              conventional
                  crown land postings – under the current highly competitive
                  environment, Elmworth will attempt to bid for oil and gas rights
                  on lands
                  that the province of Alberta owns pursuant to their regular land
                  auction
                  process.
 (b)
              joint
                  venture farm-ins – companies that own the oil and gas rights on land
                  that Elmworth wishes to pursue may not be able to drill on their
                  land for
                  a variety of reasons (lack of capital, non-core area, etc.), which
                  allows
                  Elmworth the opportunity to farm-in on their lands (i.e. drill
                  on their
                  lands in order to earn a working interest in the
                  well).
 (c)
              drilling
                  rig leverage – since drilling rigs are in such high demand, then
                  there is an opportunity to utilize a secured rig as a negotiating
                  tool to
                  access drilling sites from other companies that have not secured
                  a
                  rig.
 (d)
              technology
                  leverage – through the technical strength of Elmworth’s consultants,
                  contractors and advisory group there will be situations in which
                  companies
                  offer access to their land as a direct result of Elmworth’s willingness to
                  work with their internal teams.
 
 The
        acquisition of mineral rights on lands within the targeted area is an ongoing
        process that will continue throughout the drilling programs. To date, Elmworth
        has acquired oil and gas interests primarily via joint venture
        farm-ins.
 
 **Drilling
        capability:**
 
 On
        October 24, 2005, Elmworth executed a letter of intent with a Calgary, Alberta
        based drilling contractor to secure a drilling rig for Elmworth’s Canadian
        winter 2005/2006 program. The contract also allows Elmworth the option to
        extend
        the contract term. The 3,000 meter rig will be located in the south Grande
        Prairie Area. Calgary based Crest Energy Consultants has been engaged by
        Elmworth to design and supervise all phases of the drilling and completion
        programs for the company in Canada.
 
 **Projected
        Quarterly Milestones**
 
 May
        2006
        to July 2006
 Ø
              Acquire
                  additional seismic data in Deep Basin project in
                  Canada
 Ø
              Add
                  engineering expertise to the management
                  team
 Ø
              Complete
                  evaluation of potential winter drilling projects in Canada
 Ø
              Prepare
                  drill site location for second well in Hunter Energy
                  project
 Ø
              Continue
                  acquiring acreage in Barnett Shale
                  project
 Ø
              Commence
                  drilling wells in second project in the Barnett Shale
                  project
 Ø
              Evaluate
                  other projects to complement existing
                  programs
 
 August
        2006 to October 2006
 Ø
              Continue
                  to evaluate a Canadian winter drilling
                  program
 Ø
              Commence
                  drilling second well in the Hunter Energy
                  program
 Ø
              Continue
                  drilling wells in multiple projects in the Barnett Shale
                  project
 Ø
              Continue
                  evaluating new complementary
                  projects
 Ø
              Establish
                  initial production base
 
 November
        2006 to January 2007
 Ø
              Continue
                  to assess Canadian drilling program
 Ø
              Commence
                  drilling third well in Hunter Energy
                  program
 Ø
              Continue
                  drilling wells in multiple projects in the Barnett Shale
                  project
 Ø
              Continue
                  evaluating new complementary
                  projects
 Ø
              Expand
                  upon initial production base
  26
  February
        2007 to April 2007
 Ø
              Continue
                  to accumulate acreage in the Barnett Shale
                  Project
 Ø
              Continue
                  drilling wells in multiple projects in the Barnett Shale
                  project
 Ø
              Continue
                  evaluating new complementary
                  projects
 Ø
              Continue
                  to increase production base
 
 **Liquidity
        and Capital Resources**
 
 As
          of
          April 30, 2006, we had a working capital deficit of $11,575,508, resulting
          primarily from a non-cash derivative liability of $25,682,883 offset by
          our cash
          and cash equivalents of $15,317,626 at year end. For the three months ended
          April 30, 2006, we had net cash outflow from operating activities of $867,027.
          Cash used in investing activities totaled $1,209,769, which was primarily
          utilized for Elmworth’s share of costs relating to the preparation of the lease
          to drill its first operated Alberta deep basin gas well. In Triangle USA,
          the
          funds were primarily used for the payments made to participate in the drilling
          of four Barnett Shale Gas wells and to accumulate land in this project
          area.
          Cash provided by financing activities totaled $nil for the three months
          ended
          April 30, 2006. On June 1, 2006 we received the final $5 million installment
          relating to the December 8, 2005 Secured Convertible Debenture
          Financing ** detailed
          below. The receipt of this final installment will provide us with the liquidity
          to fully execute our fiscal 2007 budget.
 
 We
        expect
        significant capital expenditures during the next 12 months for seismic data
        acquisitions, land and drilling rights acquisitions, drilling programs, overhead
        and working capital purposes. We have sufficient funds to conduct our operations
        for existing budgeted projects for the next 12 months, but not for new or
        expanded projects. There can be no assurance that additional financing will
        be
        available in amounts or on terms acceptable to us, if at all.
 
 By
        adjusting our operations to the level of capitalization, we believe we have
        sufficient capital resources to meet projected cash flow deficits. However,
        if
        during that period or thereafter, we are not successful in generating sufficient
        liquidity from operations or in raising sufficient capital resources, on
        terms
        acceptable to us, this could have a material adverse effect on our business,
        results of operations liquidity and financial condition.
 
 We
        presently do not have any available credit, bank financing or other external
        sources of liquidity. Due to our brief history and historical operating losses,
        our operations have not been a source of liquidity. We will need to obtain
        additional capital in order to expand operations and become profitable. In
        order
        to obtain capital, we may need to sell additional shares of our common stock
        or
        borrow funds from private lenders. There can be no assurance that we will
        be
        successful in obtaining additional funding.
 
 We
        will
        still need additional investments in order to continue operations to cash
        flow
        break even. Additional investments are being sought, but we cannot guarantee
        that we will be able to obtain such investments. Financing transactions may
        include the issuance of equity or debt securities, obtaining credit facilities,
        or other financing mechanisms. However, the trading price of our common stock
        and a downturn in the U.S. stock and debt markets could make it more difficult
        to obtain financing through the issuance of equity or debt securities. Even
        if
        we are able to raise the funds required, it is possible that we could incur
        unexpected costs and expenses, fail to collect significant amounts owed to
        us,
        or experience unexpected cash requirements that would force us to seek
        alternative financing. Further, if we issue additional equity or debt
        securities, stockholders may experience additional dilution or the new equity
        securities may have rights, preferences or privileges senior to those of
        existing holders of our common stock. If additional financing is not available
        or is not available on acceptable terms, we will have to curtail our
        operations.
 
 To
        date,
        we have generated minimal revenues from interest income and have incurred
        operating losses in every quarter. Our registered independent auditors have
        stated in their report dated April 10, 2006, that we are an early exploration
        company and have not generated revenues from operations. These factors among
        others may raise substantial doubt about our ability to continue as a going
        concern.
 
 ***June
          14, 2005 Convertible Debenture Financing***
 
 On
          June
          14, 2005, to obtain funding for our ongoing operations, we entered into
          a
          securities purchase agreement with a single accredited investor pursuant
          to
          which the investor purchased an 8% convertible debenture with a principal
          amount
          of $1,000,000, and a warrant to purchase 1,000,000 shares of our common
          stock,
          exercisable at a price of $1.00 per share until June 15, 2008. Pursuant
          to the
          securities purchase agreement, the investor had the right during the next
          60
          days, but not the obligation, to purchase up to $5,000,000 of additional
          convertible debentures and warrants to purchase 5,000,000 shares of common
          stock. The investor exercised the purchase right and invested the additional
          $5,000,000 on July 14, 2005, in exchange for an 8% convertible debenture
          with a
          principal amount of $5,000,000 and a warrant to purchase 5,000,000 shares
          of our
          common stock, exercisable at a price of $1.00 per share until June 15,
          2008.
          Accordingly, we have received a total of $6,000,000 pursuant to the securities
          purchase agreement and issued 6,000,000 warrants. As of April 30, 2006,
          all of
          the warrants remained outstanding and were marked to market with a fair
          value of
          $19,353,600 (January 31, 2006 - $23,621,400), which was recorded as a non-cash
          derivative liability on the balance sheet under current
          liabilities.
  27
  The
          convertible debenture is due and payable on June 10, 2007. The principal
          and
          accrued interest on the convertible debenture may be converted into shares
          of
          our common stock at a rate of $1.00 per share, at the option of the holder.
          The
          investor has contractually agreed to restrict its ability to convert or
          exercise
          its warrants and receive shares of our common stock such that the number
          of
          shares of common stock held by it and its affiliates after such conversion
          or
          exercise does not exceed 4.99% of the then issued and outstanding shares
          of our
          common stock. As of April 30, 2006, $4,400,000 (January 31, 2006 - $5,100,000)
          of the issued debentures were outstanding and $1,600,000 (January 31, 2006
          -
          $900,000) had been converted. Due to the embedded beneficial conversion
          feature
          and detachable warrants issued, we recognized a discount of $6,000,000
          against
          the convertible debenture liability on the balance sheet, with $3,141,817
          being
          recorded to additional paid in capital and $2,858,183 being recorded to
          additional paid in capital at the time the convertible debentures were
          issued,
          which was reclassified to derivative liabilities on December 8, 2008. The
          carrying value of the convertible debentures liability on the balance sheet
          as
          at April 30, 2006 has been accreted to $1,925,000 (January 31, 2006 -
          $1,593,750).
 
 In
        connection with the private placement, we granted the investor registration
        rights. Pursuant to the registration rights agreement, if we did not file
        the
        registration statement by August 18, 2005, or if we did not have the
        registration statement declared effective within 120 days thereafter, we
        are
        obligated to pay liquidated damages in the amount of 1.0% for each 30-day
        period
        or pro rata for any portion thereof following the date by which such
        registration statement should have been filed for which no registration
        statement is filed. We did not file the registration statement until October
        7,
        2005, however, the investor orally agreed to waive any liquidated
        damages.
 
 ***December
        8, 2005 Secured Convertible Debenture Financing***
 
 To
        obtain
        funding for our ongoing operations, we entered into a Securities Purchase
        Agreement with Cornell Capital Partners L.P., an accredited investor, on
        December 8, 2005 for the sale of $15,000,000 in secured convertible debentures.
        They provided us with an aggregate of $15,000,000 as follows:
 
 ● 
        $5,000,000 was disbursed on December 8, 2005;
 
 ● 
        $5,000,000 was disbursed on January 17, 2006; and
 
 ● 
        $5,000,000 was disbursed on June 1, 2006
 
 The
          secured convertible debentures bear interest at 5%, mature three years
          from the
          date of issuance, and are convertible into our common stock, at the selling
          stockholders' option, at the lower of (i) $5.00 or (ii) 90% of the average
          of
          the three lowest daily volume weighted average prices of our common stock,
          as
          quoted by Bloomberg, LP, of the 10 trading days immediately preceding the
          date
          of conversion. Accordingly, there is in fact no limit on the number of
          shares
          into which the secured convertible debentures may be converted. As of June
          1,
          2006, the average of the three lowest intraday trading prices for our common
          stock during the preceding 10 trading days as quoted by Bloomberg, LP was
          $2.85
          and, therefore, the conversion price for the secured convertible notes
          was$2.565. Based on this conversion price, the $15,000,000 in secured
          convertible debentures, excluding interest, were convertible into 5,847,954
          shares of our common stock. The sale of such a large number of shares of
          common
          stock could significantly deflate the market price of our common stock,
          which
          would have the further effect of requiring us to issue additional shares
          upon
          conversion of the secured convertible debentures. Depending on our stock
          price,
          the conversion of the secured convertible debentures could lead to the
          sale of
          potentially controlling amounts of shares of common stock. As of April
          30, 2006,
          all $10,000,000 of the issued debentures were outstanding and none had
          been
          converted. Since the conversion feature had a fair value of $7,417,339
          at the
          time the convertible debentures were issued, we recognized a discount of
          $7,417,339 against the convertible debenture liability and recorded an
          equivalent amount to derivative liabilities on the balance sheet. The carrying
          value of the convertible debentures liability on the balance sheet as at
          April
          30, 2006 has been accreted to $3,416,353 (January 31, 2006 - $2,813,470).
          As of
          April 30, 2006, the conversion features were marked to market with a fair
          value
          of $5,505,533 (January 31, 2006 - $4,882,600), which was recorded as a
          non-cash
          derivative liability on the balance sheet under current
          liabilities.
  28
  The
        investor has contractually
        agreed to restrict its ability to convert the debentures and receive shares
        of
        our common stock such that the number of shares of common stock held by it
        and
        its affiliates after such conversion does not exceed 4.9% of the then issued
        and
        outstanding shares of common stock. ****
 
 We
        have
        the right, at our option, with three business days advance written notice,
        to
        redeem a portion or all amounts outstanding under the secured convertible
        debentures prior to the maturity date provided that the closing bid price
        of our
        common stock, is less than $5.00 at the time of the redemption. In the event
        of
        a redemption, we are obligated to pay an amount equal to the principal amount
        being redeemed plus a 20% redemption premium, and accrued interest.
 
 In
        connection with the Securities Purchase Agreement dated December 8, 2005,
        we
        granted the investor registration rights. We are obligated to use our best
        efforts to cause the registration statement to be declared effective no later
        than June 30, 2006 and to insure that the registration statement remains
        in
        effect until all of the shares of common stock issuable upon conversion of
        the
        secured convertible debentures have been sold. In the event of a default
        of our
        obligations under the Registration Rights Agreement, including if the
        registration statement is not declared effective by June 30, 2006, we are
        required pay to Cornell, as liquidated damages, for each month that the
        registration statement has not been filed or declared effective, as the case
        may
        be, either a cash amount or shares of our common stock equal to 2% of the
        liquidated value of the secured convertible debentures.
 
 In
        connection with the Securities Purchase Agreement dated December 8, 2005,
        we and
        each of our subsidiaries executed security agreements in favor of the investor
        granting them a first priority security interest in all of our goods, inventory,
        contractual rights and general intangibles, receivables, documents, instruments,
        chattel paper, and intellectual property. The security agreements state that
        if
        an event of default occurs under the secured convertible debentures or security
        agreements, the investors have the right to take possession of the collateral,
        to operate our business using the collateral, and have the right to assign,
        sell, lease or otherwise dispose of and deliver all or any part of the
        collateral, at public or private sale or otherwise to satisfy our obligations
        under these agreements.
 
 
 **Sample
        Conversion Calculation**
 
 The
        number of shares of common stock issuable upon conversion of the secured
        convertible debentures is determined by dividing that portion of the principal
        of the secured convertible debentures to be converted and interest, if any,
        by
        the conversion price. For example, assuming conversion of the $15,000,000
        of
        secured convertible debentures, at a conversion price of $2.565 as of June
        1,
        2006, the number of shares issuable upon conversion would be:
 
 $15,000,000/$2.565
        = 5,847,954 shares
 
 ***December
        28, 2005 Convertible Debenture and Warrants Financing***
 
 To
        obtain
        funding for our ongoing operations, we entered into Securities Purchase
        Agreements with two accredited investors on December 28, 2005 for the sale
        of
        (i) $10,000,000 in convertible debentures and (ii) warrants to purchase
        1,250,000 shares of our common stock. The two accredited investors, Bank
        Sal.
        Oppenheim Jr. & Cie., (Schweiz) AG and Centrum Bank each subscribed
        for 50% of the total offering.
 
 The
        investors provided us with an aggregate of $10,000,000 as follows:
 
 ●  
        $5,000,000 was disbursed on December 28, 2005; and
  29
  ● 
        $5,000,000 was disbursed on January 23, 2006.
 
 Pursuant
          to the Securities Purchase Agreements, we issued to each investor 625,000
          warrants to purchase shares of common stock on December 28, 2005 and January
          23,
          2006 exercisable at a price of $5.00 per share. Accordingly, we issued
          a total
          of 1,250,000 warrants. As of April 30, 2006, all of the warrants remained
          outstanding and were marked to market with a fair value of $823,750 (January
          31,
          2006 - $1,715,250), which was recorded as a non-cash derivative liability
          on the
          balance sheet under current liabilities.
  The
          convertible debentures bear interest at 7.5%, mature three years from the
          date
          of issuance, and are convertible into our common stock, at the selling
          stockholders' option, at a rate of $4.00 per share. The
          investors have contractually
          agreed to restrict their ability to convert its debentures or exercise
          its
          warrants and receive shares of our common stock such that the number of
          shares
          of common stock held by it and its affiliates after such conversion or
          exercise
          does not exceed 4.99% of the then issued and outstanding shares of common
          stock. **** Due
          to
          the embedded beneficial conversion feature and detachable warrants issued,
          we
          recognized a discount of $10,000,000 against the convertible debenture
          liability
          on the balance sheet, with $6,738,750 being recorded to additional paid
          in
          capital and $3,261,250 being recorded to derivative liabilities. The carrying
          value of the convertible debentures liability on the balance sheet as April
          30,
          2006 has been accreted to $1,095,890 (January 31, 2006 - $283,106).  ****
 
 In
        connection with the Securities Purchase Agreement dated December 28, 2005,
        we
        granted the investors registration rights. Pursuant to the registration rights
        agreement, if we do not have the registration statement declared effective
        on or
        before May 27, 2006, we are obligated to pay liquidated damages in the amount
        of
        1.0% for each 30-day period or pro rata for any portion thereof following
        the
        date by which such registration statement should have been filed for which
        no
        registration statement is filed or should have been declared effective.
 
 **Critical
        Accounting Policies**
 
 *Investment
        in Oil and Gas Properties*
 
 We
        utilize the full cost method to account for our investment in oil and gas
        properties. Accordingly, all costs associated with acquisition and exploration
        of oil and gas reserves, including such costs as leasehold acquisition costs,
        interest costs relating to unproved properties, geological expenditures and
        direct internal costs are capitalized into the full cost pool. As of April
        30,
        2006, we had no properties with proven reserves. When we obtain proven oil
        and
        gas reserves, capitalized costs, including estimated future costs to develop
        the
        reserves and estimated abandonment costs, net of salvage, will be depleted
        on
        the units-of-production method using estimates of proved reserves. Investments
        in unproved properties and major development projects including capitalized
        interest, if any, are not amortized until proved reserves associated with
        the
        projects can be determined.
  The
        capitalized costs included in the full cost pool are subject to a “ceiling
        test”, which limits such costs to the aggregate of the estimated present value,
        using an estimated discount rate, of the future net revenues from proved
        reserves, based on current economic and operating conditions and the estimated
        value of unproven properties.
  *Asset
          Retirement Obligations*
  We
          recognize a liability for future retirement obligations associated with
          our oil
          and gas properties. The estimated fair value of the asset retirement obligation
          is based on the current cost escalated at an inflation rate and discounted
          at a
          credit adjusted risk-free rate. This liability is capitalized as part of
          the
          cost of the related asset and amortized over its useful life. The liability
          accretes until we settle the obligation.
  *Derivative
          Liabilities*
  We
          record
          derivatives at their fair values on the date that they meet the requirements
          of
          a derivative instrument and at each subsequent balance sheet date. Any
          change in
          fair value will be recorded as non-operating, non-cash income or expense
          at each
          reporting date.
  30
  *Stock-Based
          Compensation*
 
 Prior
          to
          February 1, 2006, we accounted for stock-based awards under the recognition
          and
          measurement provisions of Accounting Principles Board Opinion (“APB”) No. 25,
“Accounting for Stock Issued to Employees” using the intrinsic value method of
          accounting. Effective February 1, 2006, we adopted the fair value recognition
          provisions of SFAS No. 123R “Share Based Payments”, using the modified
          prospective transition method. Under that transition method, compensation
          cost
          is recognized for all share-based payments granted prior to, but not yet
          vested
          as of February 1, 2006, based on the grant date fair value estimated in
          accordance with the original provisions of SFAS No. 123, and compensation
          cost
          for all share-based payments granted subsequent to February 1, 2006, based
          on
          the grant date fair value estimated in accordance with the provisions of
          SFAS
          123R. Results for prior periods have not been restated.
  31
  **ITEM
          3. CONTROLS AND PROCEDURES**
 
 *(a)
          Evaluation of disclosure controls and procedures.*
 
 The
          Company, under the supervision and with the participation of its management,
          including the principal executive officer and recently appointed principal
          financial officer, has evaluated the effectiveness of the design and operation
          of its disclosure controls and procedures as defined in Rule 13a-15(e)
          of the
          Securities Exchange Act of 1934, as amended (the “Act”) as of the end of the
          period covered by this report (the “Disclosure Controls”). Based upon the
          Disclosure Controls evaluation, the principal executive officer and principal
          financial officer have concluded that the Company’s disclosure controls and
          procedures were not effective in connection with preparing this Quarterly
          Report
          on Form 10-QSB due to a material weakness in the Company’s internal control over
          financial reporting, mainly its financial closing, review and analysis
          process.
          The Company determined that a restatement of its financial statements was
          necessary due to the issuance of convertible debentures and warrants
          (collectively, the “Securities”) in various private placements over the last two
          years. This restatement is required to properly reflect the Company’s financial
          results for certain non-cash, and non-operational related charges or credits
          to
          earnings associated with both embedded and freestanding derivative liabilities,
          and the accounting for certain derivatives under the control of the issuer
          due
          to the revised interpretation and implementation under Statement of Financial
          Accounting Standards No. 133, Accounting for Derivative Instruments and
          Hedging
          Activities, the Emerging Issues Task Force issued EITF Issue No. 00-19,
          Accounting for Derivative Financial Instruments Indexed to, and Potentially
          Settled in, a Company’s Own Stock, and FASB Staff Position
          No. EITF 00-19-2, “Accounting for Registration Payment Arrangements.”
 
 The
          Company believes that the issues surrounding the restatement of this report,
          mainly the internal controls related to the financial closing, review,
          and
          analysis process has been addressed and the Company has taken additional
          steps
          to avoid the reoccurrence of this condition by adding an additional qualified
          person with SEC experience in the financial reporting and analysis area.
          The
          Company has instituted a policy requiring the Chief Financial Officer,
          at the
          end of each quarter, to reconcile the accounting records to the securities
          issuance report prepared and maintained by the corporate secretary to ensure
          that all issuances have been properly recorded and that appropriate adjustments
          to previously issued securities are recorded, if necessary. The Company
          believes
          that these additional efforts taken by new management since the end of
          fiscal
          2008 to strengthen the Company’s internal controls will be effective in future
          periods.
 
 A
          control
          system, no matter how well conceived and operated, can provide only reasonable,
          not absolute, assurance that the objectives of the control system are met.
          Further, the design of a control system must reflect the fact that there
          are
          resource constraints, and the benefits of controls must be considered relative
          to their costs. Because of the inherent limitations in all control systems,
          no
          evaluation of controls can provide absolute assurance that all control
          issues
          and instances of fraud, if any, within the Company have been detected.
          Because
          of the inherent limitations in a cost-effective control system, misstatements
          due to error or fraud may occur and not be detected.
 
 The
          Company’s internal control over financial reporting has been modified during the
          Company’s most recent fiscal quarter by adding additional resources to address
          deficiencies in the financial closing, review and analysis process, which
          has
          materially improved the Company’s internal control over financial reporting.
  32
  *(b)
          Changes in internal control over financial reporting.*
 
 We regularly
          review our system of internal control over financial reporting and make
          changes
          to our processes and systems to improve controls and increase efficiency,
          while
          ensuring that we maintain an effective internal control environment. Changes
          may
          include such activities as implementing new, more efficient systems,
          consolidating activities, and migrating processes.
 
 We
          made
          the changes as specified above in our internal control over financial reporting
          that occurred during the period covered by this Quarterly Report on Form
          10-QSB
          that have materially affected, or are reasonably likely to materially affect,
          our internal control over financial reporting.
 33
  **PART
        II - OTHER INFORMATION**
  **Item
        1. Legal Proceedings.**
  From
        time
        to time, we may become involved in various lawsuits and legal proceedings
        which
        arise in the ordinary course of business. However, litigation is subject
        to
        inherent uncertainties, and an adverse result in these or other matters may
        arise from time to time that may harm our business. We are currently not
        aware
        of any such legal proceedings or claims that we believe will have, individually
        or in the aggregate, a material adverse affect on our business, financial
        condition or operating results.
 
 **Item
        2. Unregistered Sales of Equity Securities and Use of
        Proceeds.**
 
 None.
 
 **Item
        3. Defaults Upon Senior Securities.**
 
 None.
 **Item
        4. Submission of Matters to a Vote of Security Holders.**
 
 None.
 **Item
        5. Other Information.**
 
 None.
 **Item
        6. Exhibits**
 
 10.1
                Consulting
                    Agreement, dated as of September 1, 2005, between the Company
                    and MGG
                    Consulting (previously filed)
 
 31.1
              Certification
                  of Chief Executive Officer pursuant to Rule 13a-14 and Rule 15d-14(a),
                  promulgated under the Securities and Exchange Act of 1934, as
                  amended
 
 31.2
              Certification
                  of Chief Financial Officer pursuant to Rule 13a-14 and Rule 15d
                  14(a),
                  promulgated under the Securities and Exchange Act of 1934, as
                  amended
 
 32.1
              Certification
                  pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
                  906 of
                  the Sarbanes-Oxley Act of 2002 (Chief Executive
                  Officer)
 
 32.2
              Certification
                  pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
                  906 of
                  the Sarbanes-Oxley Act of 2002 (Chief Financial
                  Officer)
  34
  **SIGNATURES**
  In
        accordance with requirements of the Exchange Act, the registrant caused this
        report to be signed on its behalf by the undersigned, thereunto duly
        authorized.
  **TRIANGLE
                    PETROLEUM CORPORATION**Date:
                    March 6, 2008
                By:
                /s/
                    MARK GUSTAFSONMark
                    GustafsonPresident
                    (Principal Executive Officer)Date:
                    March 6, 2008
                By:
                /s/
                    SHAUN TOKERShaun
                    TokerChief
                    Financial Officer (Principal Financial Officer and
                  Principal
                    Accounting Officer)
  35