UNITED
STATES
 SECURITIES
AND EXCHANGE COMMISSION
 Washington,
D.C. 20549
 
 FORM
10-Q
 
 (Mark
One)
 xQUARTERLY REPORT PURSUANT TO SECTION
13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
 For
the Quarterly Period Ended July 31, 2010
 
 oTRANSITION REPORT PURSUANT TO
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
 (Exact
name of registrant as specified in its charter)
 
 Nevada
                
                98-0430762(State
      or other jurisdiction of
                  incorporation
      or organization)
                
                (IRS
      Employer
                  Identification
      No.)
 
 1625
Broadway, Suite 780
 Denver,
CO 80202
 (Address
of Principal Executive Offices)
 
 (303)
260-7125
 (Registrant’s
telephone number, including area code)
 
 (Former
name, former address and former fiscal year, if changed since last
report)
 
 Indicate
by check mark whether the registrant:  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes x No
o
 
 Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files).   o
Yes  o
No
 
 Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a small reporting
company.  See definitions of “large accelerated filer,” “accelerated
filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
(Check one):
  Large
      accelerated filer  ̈
              Accelerated
      filer  ̈Non-accelerated
      filer  ̈
              Smaller
      reporting company x(Do
      not check if a smaller reporting company)
 
 Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes  ̈   No
x
 
 As of
September 14, 2010,there were 101,055,835 shares of registrant’s common stock
outstanding.
  
  TRIANGLE
PETROLEUM CORPORATION AND SUBSIDIARIES
 
 INDEXPART
      I.
                                                  FINANCIAL
      INFORMATIONITEM
      1.
                                                  Financial
      Statements
                                                  3Consolidated
      balance sheets at July 31, 2010 and January 31, 2010
      (unaudited)
                                                  3Consolidated
      statements of operations for the three and six months ended July 31, 2010
      and 2009 (unaudited)
                                                  4Consolidated
      statements of cash flows for the three and six months ended July 31, 2010
      and 2009 (unaudited)
                                                  5Consolidated
      statements of stockholders’ equity for the three and six months ended July
      31, 2010 and 2009 (unaudited)
                                                  6Notes
      to unaudited consolidated financial statements
                                                  7 –
      11ITEM
      2.
                                                  Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations
                                                  12
      – 18ITEM
      3.
                                                  Quantitative
      and Qualitative Disclosures About Market Risk
                                                  19ITEM
      4T.
                                                  Controls
      and Procedures
                                                  19-20PART
      II.
                                                  OTHER
      INFORMATIONITEM
      1
                                                  Legal
      proceedings
                                                  21ITEM
      1A
                                                  Risk
      factors
                                                  21ITEM
      2
                                                  Unregistered
      sales of equity securities and use of proceeds
                                                  21ITEM
      3
                                                  Defaults
      upon senior securities
                                                  21ITEM
      4
                                                  Submission
      of matters to a vote of security holders
                                                  21ITEM
      5
                                                  Other
      information
                                                  21ITEM
      6
                                                  Exhibits
                                                  21SIGNATURES
                                                  22
  The
accompanying notes are an integral part of these consolidated financial
statements.
  
 
 Triangle
Petroleum Corporation
 Consolidated
Balance Sheets
 (Expressed
in U.S. dollars)
 (Unaudited)
 
 July 31,
                            2010
                            $
                          
                          
                          January 31,
                            2010
                            $ASSETSCurrent
      AssetsCash
      and cash equivalents
                          
                          
                          2,050,357
                          
                          
                          
                          4,878,601Prepaid
      expenses
                          
                          
                          461,464
                          
                          
                          
                          342,635Other
      receivables
                          
                          
                          1,913,241
                          
                          
                          
                          313,785Total
      Current Assets
                          
                          
                          4,425,062
                          
                          
                          
                          5,535,021Property
      and Equipment
                          
                          
                          25,432
                          
                          
                          
                          39,296Oil
      and Gas Properties (Note 3)
                          
                          
                          27,995,018
                          
                          
                          
                          18,783,375Total
      Assets
                          
                          
                          32,445,512
                          
                          
                          
                          24,357,692LIABILITIES
      AND STOCKHOLDERS’ EQUITYCurrent
      LiabilitiesAccounts
      payable
                          
                          
                          134,803
                          
                          
                          
                          574,723Accrued
      liabilities
                          
                          
                          111,702
                          
                          
                          
                          119,224Total
      Current Liabilities
                          
                          
                          246,505
                          
                          
                          
                          693,947Asset
      Retirement Obligations (Note 4)
                          
                          
                          1,297,689
                          
                          
                          
                          1,180,515Total
      Liabilities
                          
                          
                          1,544,194
                          
                          
                          
                          1,874,462Subsequent
      Events (Note 8)Stockholders’
      EquityCommon
      StockAuthorized:
      150,000,000 shares, par value $0.00001Issued:
      99,011,648 shares(January
      31, 2010 – 69,926,043 shares)
                          
                          
                          990
                          
                          
                          
                          699Additional
      Paid-In Capital
                          
                          
                          95,370,116
                          
                          
                          
                          81,950,076Warrants
      (Note 5)
                          
                          
                          -
                          
                          
                          
                          4,237,100Deficit
                          
                          
                          (64,469,788
                          )
                          
                          
                          (63,704,645
                          )Total
      Stockholders’ Equity
                          
                          
                          30,901,318
                          
                          
                          
                          22,483,230Total
      Liabilities and Stockholders’ Equity
                          
                          
                          32,445,512
                          
                          
                          
                          24,357,692
 
 The
accompanying notes are an integral part of these consolidated financial
statements.
  3
 
 Triangle
Petroleum Corporation
 Consolidated
Statements of Operations
 (Expressed
in U.S. dollars)
 (Unaudited)
 
 Three
                          Months
                          Ended
                          July 31,
                        
                        
                        Three
                          Months
                          Ended
                          July 31,
                        
                        
                        Six
                          Months
                          Ended
                          July 31,
                        
                        
                        Six
                          Months
                          Ended
                          July 31,2010
                        
                        
                        2009
                        
                        
                        2010
                        
                        
                        2009$
                        
                        
                        $
                        
                        
                        $
                        
                        
                        $Revenue,
      net of royalties
                        
                        
                        8,803
                        
                        
                        
                        29,183
                        
                        
                        
                        41,722
                        
                        
                        
                        63,087Operating
      ExpensesOil
      and gas production
                        
                        
                        6,288
                        
                        
                        
                        31,875
                        
                        
                        
                        13,495
                        
                        
                        
                        52,576Depletion
      and accretion (Notes 3 and 4)
                        
                        
                        67,316
                        
                        
                        
                        50,262
                        
                        
                        
                        131,795
                        
                        
                        
                        91,477Depreciation
      – property and equipment
                        
                        
                        6,791
                        
                        
                        
                        7,335
                        
                        
                        
                        13,864
                        
                        
                        
                        11,674General
      and administrative
                        
                        
                        620,179
                        
                        
                        
                        719,757
                        
                        
                        
                        1,171,320
                        
                        
                        
                        1,404,685Stock-based
      compensation (Notes 6 and 7)
                        
                        
                        362,264
                        
                        
                        
                        135,543
                        
                        
                        
                        483,805
                        
                        
                        
                        270,463Gain
      on sale of assets
                        
                        
                        (976,900
                        )
                        
                        
                        (124,621
                        )
                        
                        
                        (976,900
                        )
                        
                        
                        (124,621
                        )Foreign
      exchange loss (gain)
                        
                        
                        19,661
                        
                        
                        
                        (558,575
                        )
                        
                        
                        (30,141
                        )
                        
                        
                        (707,654
                        )105,599
                        
                        
                        
                        261,576
                        
                        
                        
                        807,238
                        
                        
                        
                        998,600Loss
      from Operations
                        
                        
                        (96,796
                        )
                        
                        
                        (232,393
                        )
                        
                        
                        (765,516
                        )
                        
                        
                        (935,513
                        )Other
      IncomeInterest
      income
                        
                        
                        32
                        
                        
                        
                        41
                        
                        
                        
                        373
                        
                        
                        
                        6,213Loss
      for the Period
                        
                        
                        (96,764
                        )
                        
                        
                        (232,352
                        )
                        
                        
                        (765,143
                        )
                        
                        
                        (929,300
                        )Loss
      Per Share – Basic and Diluted
                        
                        
                        (0.001
                        )
                        
                        
                        (0.003
                        )
                        
                        
                        (0.008
                        )
                        
                        
                        (0.013
                        )Weighted
      Average Number of Shares Outstanding – Basic and
    Diluted
                        
                        
                        98,812,735
                        
                        
                        
                        69,926,043
                        
                        
                        
                        91,586,096
                        
                        
                        
                        69,926,043
 
 The
accompanying notes are an integral part of these consolidated financial
statements.
  4
 
 Triangle
Petroleum Corporation
 Consolidated
Statements of Cash Flows
 (Expressed
in U.S. dollars)
 (Unaudited)
 
 Three Months
                            Ended
                            July 31, 2010
                          
                          
                          Three Months
                            Ended
                            July 31, 2009
                          
                          
                          Six Months
                            Ended
                            July 31, 2010
                          
                          
                          Six Months
                            Ended
                            July 31, 2009$
                          
                          
                          $
                          
                          
                          $
                          
                          
                          $Operating
      ActivitiesLoss
      for the period
                          
                          
                          (96,764
                          )
                          
                          
                          (232,352
                          )
                          
                          
                          (765,143
                          )
                          
                          
                          (929,300
                          )Adjustments
      to reconcile loss for the period to net cash used in operating
      activities:Depletion
      and accretion (Notes 3 and 4)
                          
                          
                          67,316
                          
                          
                          
                          50,262
                          
                          
                          
                          131,795
                          
                          
                          
                          91,477Depreciation
      – property and equipment
                          
                          
                          6,791
                          
                          
                          
                          7,335
                          
                          
                          
                          13,864
                          
                          
                          
                          11,674Stock-based
      compensation (Notes 6 and 7)
                          
                          
                          362,264
                          
                          
                          
                          135,543
                          
                          
                          
                          483,805
                          
                          
                          
                          270,463Gain
      on sale of assets
                          
                          
                          (976,900
                          )
                          
                          
                          (124,621
                          )
                          
                          
                          (976,900
                          )
                          
                          
                          (124,621
                          )Foreign
      exchange
                          
                          
                          33,424
                          
                          
                          
                          (547,225
                          )
                          
                          
                          (13,114
                          )
                          
                          
                          (709,812
                          )Asset
      retirement costs (Note 4)
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          (6,509
                          )Changes
      in operating working capitalForeign
      exchange
                          
                          
                          (212
                          )
                          
                          
                          3,664
                          
                          
                          
                          1,256
                          
                          
                          
                          (4,494
                          )Prepaid
      expenses
                          
                          
                          (123,795
                          )
                          
                          
                          (1,745
                          )
                          
                          
                          (168,699
                          )
                          
                          
                          (23,621
                          )Other
      receivables
                          
                          
                          (2,505
                          )
                          
                          
                          11,992
                          
                          
                          
                          41,967
                          
                          
                          
                          683,244Accounts
      payable
                          
                          
                          (182,366
                          )
                          
                          
                          (40,268
                          )
                          
                          
                          (381,917
                          )
                          
                          
                          (154,402
                          )Accrued
      liabilities
                          
                          
                          7,504
                          
                          
                          
                          4,251
                          
                          
                          
                          (7,522
                          )
                          
                          
                          5,739Cash
      Used in Operating Activities
                          
                          
                          (905,243
                          )
                          
                          
                          (733,164
                          )
                          
                          
                          (1,640,608
                          )
                          
                          
                          (890,162
                          )Financing
      ActivitiesProceeds
      from issuance of common stock
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          9,472,957
                          
                          
                          
                          -Share
      issuance costs
                          
                          
                          (12,335
                          )
                          
                          
                          -
                          
                          
                          
                          (773,531
                          )
                          
                          
                          -Cash
      Provided by (used in) Financing Activities
                          
                          
                          (12,335
                          )
                          
                          
                          -
                          
                          
                          
                          8,699,426
                          
                          
                          
                          -Investing
      ActivitiesPurchase
      of  property and equipment
                          
                          
                          -
                          
                          
                          
                          (503
                          )
                          
                          
                          -
                          
                          
                          
                          (23,507
                          )Oil
      and gas property expenditures (Note 3)
                          
                          
                          (6,480,146
                          )
                          
                          
                          (586,952
                          )
                          
                          
                          (10,875,818
                          )
                          
                          
                          (2,144,778
                          )Cash
      advances from partners
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          (677,843
                          )Proceeds
      received from the sale of oil and gas properties
                          
                          
                          976,900
                          
                          
                          
                          133,325
                          
                          
                          
                          976,900
                          
                          
                          
                          133,325Cash
      Used by Investing Activities
                          
                          
                          (5,503,246
                          )
                          
                          
                          (454,130
                          )
                          
                          
                          (9,898,918
                          )
                          
                          
                          (2,712,803
                          )Foreign
      exchange change on cash and cash equivalents
                          
                          
                          (43,019
                          )
                          
                          
                          547,557
                          
                          
                          
                          11,856
                          
                          
                          
                          673,524Change
      in Cash and Cash Equivalents
                          
                          
                          (6,463,843
                          )
                          
                          
                          (639,737
                          )
                          
                          
                          (2,828,244
                          )
                          
                          
                          (2,929,441
                          )Cash
      and Cash Equivalents – Beginning of Period
                          
                          
                          8,514,200
                          
                          
                          
                          6,159,767
                          
                          
                          
                          4,878,601
                          
                          
                          
                          8,449,471Cash
      and Cash Equivalents – End of Period
                          
                          
                          2,050,357
                          
                          
                          
                          5,520,030
                          
                          
                          
                          2,050,357
                          
                          
                          
                          5,520,030Non-cash
      Investing and Financing ActivitiesCommon
      stock issued for conversion of debentures
                          
                          
                          -
                          
                          
                          
                          625,000
                          
                          
                          
                          -
                          
                          
                          
                          2,100,140
 
 The
accompanying notes are an integral part of these consolidated financial
statements.
  5
 
 Triangle
Petroleum Corporation
 Statement
of Stockholders’ Equity
 Six
Months Ended July 31, 2010
 (Expressed
in U.S. dollars)
 (Unaudited)
 
 AdditionalCommon
      Stock
                          
                          
                          Paid-inShares
                          
                          
                          Amount
                          
                          
                          Capital
                          
                          
                          Warrants
                          
                          
                          Deficit
                          
                          
                          Total#
                          
                          
                          $
                          
                          
                          $
                          
                          
                          $
                          
                          
                          $
                          
                          
                          $Balance
      – January 31, 2010
                          
                          
                          69,926,043
                          
                          
                          
                          699
                          
                          
                          
                          81,950,076
                          
                          
                          
                          4,237,100
                          
                          
                          
                          (63,704,645
                          )
                          
                          
                          22,483,230Stock
      options exercised
                          
                          
                          791,666
                          
                          
                          
                          8
                          
                          
                          
                          234,949
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          234,957Common
      shares issued (net of costs of $773,531) at a price of $0.33 per
      share
                          
                          
                          27,993,939
                          
                          
                          
                          280
                          
                          
                          
                          8,464,189
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          8,464,469Common
      shares issued pursuant to Termination Agreements at a deemed price of
      $0.60 per share (Note 6)
                          
                          
                          300,000
                          
                          
                          
                          3
                          
                          
                          
                          179,997
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          180,000Expired
      warrants
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          4,237,100
                          
                          
                          
                          (4,237,100
                          )
                          
                          
                          
                          
                          
                          
                          -Stock-based
      compensation (Notes 6 and 7)
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          303,805
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          303,805Net loss for the period
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          (765,143
                          )
                          
                          
                          (765,143
                          )Balance – July 31, 2010
                          
                          
                          99,011,648
                          
                          
                          
                          990
                          
                          
                          
                          95,370,116
                          
                          
                          
                          -
                          
                          
                          
                          (64,469,788
                          )
                          
                          
                          30,901,318
  Triangle
Petroleum Corporation
 Statement
of Stockholders’ Equity
 Six
Months Ended July 31, 2009
 (Expressed
in U.S. dollars)
 (Unaudited)
 
 AdditionalCommon Stock
                        
                        
                        Paid-inShares
                        
                        
                        Amount
                        
                        
                        Capital
                        
                        
                        Warrants
                        
                        
                        Deficit
                        
                        
                        Total#
                        
                        
                        $
                        
                        
                        $
                        
                        
                        $
                        
                        
                        $
                        
                        
                        $Balance
      – January 31, 2009
                        
                        
                        69,926,043
                        
                        
                        
                        699
                        
                        
                        
                        81,155,715
                        
                        
                        
                        4,237,100
                        
                        
                        
                        (61,564,544
                        )
                        
                        
                        23,828,970Stock-based
      compensation (Notes 6 and 7)
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        270,463
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        270,463Net
      loss for the period
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        (929,300
                        )
                        
                        
                        (929,300
                        )Balance
      – July 31, 2009
                        
                        
                        69,926,043
                        
                        
                        
                        699
                        
                        
                        
                        81,426,178
                        
                        
                        
                        4,237,100
                        
                        
                        
                        (62,493,844
                        )
                        
                        
                        23,170,133
 
 The
accompanying notes are an integral part of these consolidated financial
statements
  6
  Triangle
Petroleum Corporation
 Notes to
the Consolidated Financial Statements
 (Expressed
in U.S. dollars, except as noted)
 (Unaudited)
 
 Triangle
Petroleum Corporation, together with its consolidated subsidiaries (“Triangle”
or the “Company”), is an independent oil and gas company focused primarily on
the acquisition, exploration and development of resource
properties.  The Company’s primary exploration and development acreage
is located in the Williston Basin of North Dakota and the Horton Bluff formation
of the Maritimes Basin of Eastern Canada. The Company also has minor producing
properties in the Fort Worth Basin.
 
 1.
      Nature of Operations
 
 The
Company is primarily engaged in the acquisition, exploration and development of
oil and gas resource properties and has a limited number of producing wells that
generate cash flows from operations. The Company has not generated significant
revenues from operations. The Company expects that significant additional
exploration and development activities will be necessary to established proved
reserves and to commercialize the oil and gas properties.
 
 The
Company believes that it has sufficient funds, including those raised in the
first and third quarters of fiscal 2011, to maintain its interest in the
existing properties and to maintain core operating, exploration and development
activities through to July 31, 2011. The Company monitors its expenditure
budgets and adjusts its expenditure plans to conform to available funding.
However, additional funding will be required to complete exploration and
development activities. The Company plans to fund exploration and development
activities through existing cash resources and in the future by offering debt or
equity securities, farm-out arrangements or other means.
 
 2.
      Accounting Policies
 
 (a)         Basis
of Presentation
 
 These
financial statements and related notes are presented in accordance with
accounting principles generally accepted in the United States, and are expressed
in U.S. dollars. These consolidated financial statements include the accounts of
the Company and its two wholly-owned subsidiaries, Elmworth Energy Corporation,
incorporated in the Province of Alberta, Canada, and Triangle USA Petroleum
Corporation, incorporated in the State of Colorado, USA. All significant
intercompany balances and transactions have been eliminated. The Company’s
fiscal year-end is January 31.
 
 In the
opinion of management, the accompanying financial statements reflect all
adjustments necessary to present fairly our financial position at July 31, 2010
and our operations and cash flows for the three and six month periods ended July
31, 2010 and 2009. In preparing the accompanying financial statements,
management has made certain estimates and assumptions that affect reported
amounts in the financial statements and disclosures of contingencies. Actual
results may differ from those estimates. The results for interim periods are not
necessarily indicative of annual results.
  Certain
disclosures have been condensed or omitted from these financial statements.
Accordingly, they should be read in conjunction with the consolidated financial
statements and notes thereto included in our Annual Report on Form 10-K for the
year ended January 31, 2010.
 
 The
Company’s oil and gas operations are generally conducted jointly with others
and, as such, these financial statements reflect the Company’s proportionate
share of these operations.
  7
  Triangle
Petroleum Corporation
 Notes to
the Consolidated Financial Statements
 (Expressed
in U.S. dollars, except as noted)
 (Unaudited)
 
 3.
              Oil
      and Gas Properties
 
 Six
months ended July 31, 2010:
  Costs
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  Accumulated Depletion
                                                  
                                                  
                                                  Net CarryingOpening
                                                  
                                                  
                                                  Additions
                                                  
                                                  
                                                  Closing
                                                  
                                                  
                                                  Opening
                                                  
                                                  
                                                  Depletion
                                                  
                                                  
                                                  Gain
                                                  
                                                  
                                                  Closing
                                                  
                                                  
                                                  ValueProven
      Properties
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  805,251
                                                  
                                                  
                                                  
                                                  805,251
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  805,251Unproven
      Properties
                                                  
                                                  
                                                  36,660,276
                                                  
                                                  
                                                  
                                                  8,406,392
                                                  
                                                  
                                                  
                                                  45,066,668
                                                  
                                                  
                                                  
                                                  17,876,901
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  17,876,901
                                                  
                                                  
                                                  
                                                  27,189,767Total
                                                  
                                                  
                                                  36,660,276
                                                  
                                                  
                                                  
                                                  9,211,643
                                                  
                                                  
                                                  
                                                  45,871,919
                                                  
                                                  
                                                  
                                                  17,876,901
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  17,876,901
                                                  
                                                  
                                                  
                                                  27,995,018
 
 For the
six month period ended July 31, 2010, the Company’s net cash outflow for oil and
gas additions was $10,875,818, including cash additions of $9,226,264 plus
$1,649,554 of changes in investing working capital during the first half of
fiscal 2011. Net non-cash additions of ($14,621) included ($29,394) of ARO
dispositions and $14,773 of ARO additions.
 
 Proved
Properties
 
 At
January 31, 2010, the carrying value of proved properties was $nil. At July 31,
2010, the carrying value of proved properties was $805,251, comprised of assets
in the Williston Basin (North Dakota).
 
 Unproven
Properties
 
 All of
the Company’s unproven properties are not subject to depletion. The Company's
unproven acquisition and exploration costs were distributed in the following
geographic areas:
 
 July 31, 2010
                        $
                      
                      
                      January 31, 2010
                        $Windsor
      Block of Maritimes Basin  (Nova Scotia)
                      
                      
                      18,861,608
                      
                      
                      
                      18,783,375Williston
      Basin (North Dakota)
                      
                      
                      8,328,159
                      
                      
                      
                      -Total
      unproven acquisition and exploration costs
                      
                      
                      27,189,767
                      
                      
                      
                      18,783,375
 
 The
Company has an 87% working interest in 474,625 gross acres (412,924 net acres)
in the Windsor Sub-Basin of the Maritimes Basin located in the Province of Nova
Scotia, Canada (the “Windsor Block”) and serve as operator. Effective April 15,
2009, the Nova Scotia government issued a 10 year production lease covering the
lands. The production lease and work program for the Windsor Block will be due
for review in April 2014 with the Province of Nova Scotia. The Company is
currently soliciting interest from industry parties to participate in the
drilling of a test well to evaluate the newly identified seismic structure and
to participate in a joint venture to further evaluate the potential on the
Windsor Block.
 
 During
the first half of fiscal 2011, the Company acquired approximately 10,000 net
acres in the Williston Basin of North Dakota for a cost of $7.4 million and
incurred drilling costs of $0.9 million in the Grizzly
project.
  8
 
 Triangle
Petroleum Corporation
 Notes to
the Consolidated Financial Statements
 (Expressed
in U.S. dollars, except as noted)
 (Unaudited)
 
 4. Asset
Retirement Obligations
 
 Six Months
                          July 31, 2010
                          $
                        
                        
                        Six Months
                          July 31, 2009
                          $Balance,
      beginning of period
                        
                        
                        1,180,515
                        
                        
                        
                        727,862Liabilities
      incurred
                        
                        
                        14,773
                        
                        
                        
                        144,750Liabilities
      settled as part of disposition
                        
                        
                        (29,394
                        )
                        
                        
                        -Liabilities
      settled in cash
                        
                        
                        -
                        
                        
                        
                        (6,509
                        )Accretion
                        
                        
                        131,795
                        
                        
                        
                        61,132Balance, end of period
                        
                        
                        1,297,689
                        
                        
                        
                        927,235
 
 5.
              Warrants
 
 As at
January 31, 2010, the Company had 9,128,750 warrants outstanding that were
exercisable into 9,128,750 shares of common stock at a price of $2.25 per share.
No warrants were exercised and all warrants expired on June 3,
2010.
 
 6.
              Stock
      Options
 
 During
the three and six month periods ended July 31, 2010, the Company recorded
stock-based compensation expense for the stock options, DSU’s and Termination
Agreements of $362,264 and $483,305 (2009 – $135,543 and $270,463). In the
second quarter of fiscal 2011, the Company issued 300,000 common shares to
former employees pursuant to various Termination Agreements at a deemed price of
$0.60 share for consideration of $180,000.
 
 A summary
of the outstanding stock options is as follows:
 
 Options
                              #
                            
                            
                            Weighted
                              Average
                              Exercise Price
                              $
                            
                            
                            Aggregate
                              Intrinsic
                              Value
                              $Outstanding,
      January 31, 2010
                            
                            
                            5,700,000
                            
                            
                            
                            0.52
                            
                            
                            
                            -Exercised
                            
                            
                            (791,666
                            )
                            
                            
                            0.24
                            
                            
                            
                            203,458Cancelled
                            
                            
                            (850,000
                            )
                            
                            
                            2.47
                            
                            
                            
                            -Forfeited
                            
                            
                            (658,334
                            )
                            
                            
                            0.24
                            
                            
                            
                            -Outstanding
      July 31,2010
                            
                            
                            3,400,000
                            
                            
                            
                            0.15
                            
                            
                            
                            1,197,480Exercisable, July 31, 2010
                            
                            
                            200,000
                            
                            
                            
                            0.25
                            
                            
                            
                            49,140
 
 The
weighted average remaining contractual life of stock options outstanding as of
July 31, 2010 was 4.2 years.
 As at
July 31, 2010, there was $265,517 of total unrecognized compensation costs
related to non-vested share-based compensation arrangements which are expected
to be recognized over a weighted-average period of 27 months.
  9
 
 Triangle
Petroleum Corporation
 Notes to
the Consolidated Financial Statements
 (Expressed
in U.S. dollars, except as noted)
 (Unaudited)
 
 6.
              Stock
      Options (continued)
 
 A summary
of the status of the Company’s non-vested share options as of July 31, 2010, and
changes during the six month period ended July 31, 2010, is presented
below:
 
 Options
                      #
                    
                    
                    Weighted
                      Average
                      Grant-Date
                      Fair Value
                      $Non-vested
      at January 31, 2010
                    
                    
                    3,863,333
                    
                    
                    
                    0.12Cancelled
                    
                    
                    (30,000
                    )
                    
                    
                    0.78Forfeited
                    
                    
                    (550,000
                    )
                    
                    
                    0.12Vested
                    
                    
                    (83,333
                    )
                    
                    
                    0.21Non-vested
      at July 31, 2010
                    
                    
                    3,200,000
                    
                    
                    
                    0.11
 
 7.  Deferred
      Share Units
 
 Effective
      February 2, 2010, the Company implemented a Deferred Share Unit (“DSU”)
      pursuant to the existing Stock Option Plan (2009). A DSU vests and will be
      automatically exchanged on a one-for-one basis for common shares issued
      from treasury equal to the number of DSU’s granted, one year from the date
      of grant.
 
 Deferred
                      Share Units
                      #
                    
                    
                    Aggregate
                      Intrinsic Value
                      $Outstanding,
      January 31, 2010
                    
                    
                    -
                    
                    
                    
                    -Granted
                    
                    
                    2,150,000
                    
                    
                    
                    1,075,000Outstanding
      July 31,2010
                    
                    
                    2,150,000
                    
                    
                    
                    1,075,000Exercisable,
      July 31, 2010
                    
                    
                    -
                    
                    
                    
                    -
 
 The
      stock-based compensation associated with the DSU’s was based on the number
      of DSU’s granted multiplied by the trading price of the common shares on
      the grant date. The forfeiture rate applied to the DSU’s is 10%. The
      estimated cost of the DSU’s is being expensed over the one year vesting
      period. As at July 31, 2010, there was $387,131 of total unrecognized
      compensation costs related to deferred share units which are expected to
      be recognized over a weighted-average period of 6
  months.
  10
 
 Triangle
Petroleum Corporation
 Notes to
the Consolidated Financial Statements
 (Expressed
in U.S. dollars, except as noted)
 (Unaudited)
 
 8.
              Subsequent
      Event
 
 On August 9, 2010, the Company
completed a private placement; whereby, 2,044,187 common shares were issued at a
price of $0.43 per share for net proceeds of approximately $836,000. Triangle
intends to use the funds for general corporate purposes, including acquisition
of acreage, funding of drilling commitments and working
capital.
  11
  ITEM
2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
 
 Management's
Discussion and Analysis of Financial Condition and Results of Operations
includes a number of forward-looking statements that reflect our management's
current views with respect to future events and financial performance. You can
identify these statements by forward-looking words such as “may,” “will,”
“expect,” “anticipate,” “believe,” “estimate” and “continue,” or similar
words.  Those statements include statements regarding the intent,
belief or current expectations of us and members of our management team as well
as the assumptions on which such statements are based. Prospective investors are
cautioned that any such forward-looking statements are not guarantees of future
performance and involve risk and uncertainties, and that actual results may
differ materially from those contemplated by such forward-looking
statements.
 
 Readers
are urged to carefully review and consider the various disclosures made by us in
this report and in our other reports and statements filed with the Securities
and Exchange Commission. The following Management’s Discussion and Analysis of
Financial Condition and Results of Operations of the Company should be read in
conjunction with the Consolidated Financial Statements and notes related thereto
included in this Quarterly Report on Form 10-Q.
Important  factors  currently  known  to
our
management  could  cause  actual  results  to
differ  materially  from  those in
forward-looking  statements.  We undertake no obligation to
update or revise forward-looking statements to reflect changed assumptions, the
occurrence of unanticipated events or changes in the future operating results
over time. We believe that our assumptions are based upon reasonable data
derived from and known about our business and operations.  No
assurances are made that actual results of operations or the results of our
future activities will not differ materially from our
assumptions.  Factors that could cause differences include, but are
not limited to, expected market demand for our products, fluctuations in pricing
for materials and competition.
 
 Overview
 
 We are an
oil and natural gas exploration company currently focused on the acquisition and
development of unconventional shale oil resources. In late 2009, we adopted a
new investment strategy shifting our area of focus from the Maritimes Basin in
the Province of Nova Scotia to the Bakken Shale and Three Forks formations in
the Williston Basin of North Dakota and Montana.  To date, we have
acquired over 10,000 net acres primarily in McKenzie and Williams Counties of
North Dakota. Having identified an area of focus in the Bakken Shale that we
believe will generate attractive returns on invested capital, we are continuing
to explore further opportunities in the region with a goal of reaching 30,000
net acres by the end of 2011.
 
 In the
Maritimes Basin, we hold over 400,000 net acres with numerous conventional and
unconventional objectives, including the Windsor and Horton Shales. As a result
of the processing and interpretation of our proprietary 2D seismic data, we have
identified a conventional exploration opportunity that we believe could hold
significant natural gas reserves. We are currently marketing the prospect to
industry partners as a farm-out opportunity and propose to enter into an
agreement whereby we would maintain a working interest position and potential
partners would agree to cover 100% of the capital costs of an initial
exploration well.
 
 Properties
 
 All of
our oil and gas properties are located in the United States and
Canada.
 
 Plan
of Operations
  Williston Basin –We have non-operated leasehold positions in the Williston
Basin.  The operations of our non-operated leasehold positions are
conducted primarily through agreements with Slawson and Kodiak.  Both
companies are experienced operators focused on the development of the Bakken
Shale and Three Forks formations.  We are seeking to acquire
additional acreage outside of these agreements.
  12
 
 During
the first half fiscal 2011, the Company spent $7,422,387 to acquire
approximately 10,000 net acres in the Williston basin in North Dakota as
part of the ongoing leasehold acquisitions pursuant to the Slawson Agreement and
the Grizzly Project.
 
 We have
entered into a joint participation agreement, effective January 15, 2010 (the
“Slawson Agreement”) with Slawson Exploration Company, Inc. (“Slawson”) to
acquire and develop acreage in known areas of production from the Bakken Shale
and Three Forks formations.The Slawson Agreement is
confined to an agreed upon area of mutual interest (“AMI”) within the Rough
Rider area of McKenzie and Williams Counties in North Dakota.  We have
acquired approximately 6,000 net acres to date under the Slawson Agreement and
have identified numerous drilling locations with plans to spud our first well
between late 2010 and early 2011. Under the terms of the Slawson Agreement, we
agree to pay 33% of the gross well costs and between a 20% and 60% premium of
our pro rata share of leasehold acquisition costs to earn a 30% working interest
in all wells drilled within the AMI through January 15, 2012. We believe the
terms of the Slawson Agreement are consistent with industry practice and will
result in net costs to us that are substantially lower than we could achieve on
our own.
 
 In May
2010, the Company entered into a purchase and sale agreement with Kodiak Oil and
Gas Corporation (“Kodiak”), acquiring approximately 2,600 net acres in an area
of McKenzie County, referred to as the Grizzly Project. Under the terms of the
agreement, we agreed to pay $3.2 million to Kodiak in the form of future
drilling carry for a 30% working interest in the Grizzly Project area. After the
$3.2 million has been expended, we will have earned our 2,600 net acres, with
all future wells to be drilled according to our working interest position. As
described below, we have plans to drill at least three gross wells in the
Grizzly Project by year-end.
 
 Using industry accepted well spacing
parameters, we believe that there could be over 75 gross drilling locations
prospective for the Bakken Shale on our acreage in the Williston
Basin.  Where applicable we plan to drill three 9,500 foot lateral
wells on 1,280 acre units. Consistent with leading field operators, we plan to
perform multi-stage fracs with 25 to 30 stages on each lateral well. We also
plan to drill shorter laterals on smaller units as dictated by our leasehold
position. We expect the number of identified locations to grow as we continue to
evaluate and expand our leasehold position and industry activity confirms the
prospectivity of the Bakken Shale and Three Forks formations on our
acreage.
 
 In May
2010, we announced our plans to participate in the drilling of a well in
McKenzie County with an approximate 15% working interest in this well.
Operations commenced in July 2010 with XTO Energy Inc. as operator. The well is
being drilled on a 1,280 spacing unit and is expected to be completed with a
25-stage frac job. We anticipate this well being spud in the third quarter of
fiscal 2011.
 
 In June
2010, we commenced a two well drilling program in the Grizzly Project with
Kodiak as operator. The first well, the Grizzly #13-6H, is a short lateral
re-entry of an existing wellbore. The gross estimated costs are $3.2 million and
Triangle holds an approximate 26% working interest in this well. We anticipate
this well completion will occur in September 2010. The second well, the Grizzly
#1-27H, is being drilled on a 1,280 spacing unit and is expected to be completed
with a 25-stage frac job. The gross estimated costs are $6.5 million and we have
an approximate 26% working interest in this well. We anticipate this well will
also be completed in September 2010. The Company also acquired an approximate
26% working interest in one oil well in the Grizzly Project area for a cost of
$0.8 million. This oil well has an estimated production capability of 55 Boepd
(15 Boepd net).
 
 On Shore
Exploration Program –Nova Scotia–We have an 87% working
interest in approximately 474,625 gross acres (approximately 412,924 net acres)
in the Windsor Sub-Basin of the Maritimes Basin located in the Province of Nova
Scotia, Canada (the “Windsor Block”) and serve as operator of the Windsor Block.
In October 2009, we completed an approximately 30 square kilometer 2D seismic
shoot on the Windsor Block. This data was processed and interpreted in the
fiscal quarter ending January 31, 2010. We believe that this seismic program,
combined with the three completion operations on previously drilled vertical
exploration wells, satisfied the first-year requirements of our 10-year
production lease.
  13


We are
continuing to evaluate the anticipated performance and viability of our working
interest in the Windsor Block. In the course of such evaluations, we intend to
consider a range of options available under our existing production lease,
including potential farm-outs or divestitures of some or all of our leasehold.
We do not currently plan on devoting any of our 2010 capital budget to our
Maritimes Basin operations.





Based on
the interpretation of the seismic data, a conventional closed structure has been
identified on the Windsor Block. We are currently soliciting interest from
industry parties to participate in the drilling of a test well to evaluate the
newly identified seismic structure and to participate in a joint venture to
further evaluate the potential on the Windsor Block.





Other
Properties





Non-Core
Producing Properties –We were producing from one well in the Alberta
Deep Basin of Canada, which was sold in May 2010 along with the associated
undeveloped acreage for approximately $977,000 in cash. The Company also has
production from three low working interest shale gas wells in the Barnett Shale
trend of the Fort Worth Basin of Texas, although we consider the production
volumes to be immaterial.





Non-Core
Undeveloped Properties–We have 4,427non-operated net acres
in the U.S. Rocky Mountains and 3,024 net acres in the Alberta Deep Basin of
Canada. In fiscal 2010, there was no exploration activity on these undeveloped
land positions and there continues to be no exploration activity planned for
these projects in fiscal 2011.





Results
of operations for the three and six months ended July 31, 2010 compared to the
three and six months ended July 31, 2009





Daily Sales Volumes, Working
Interest before royalties





Three Months
                                  Ended
                                  July 31, 2010
                                
                                
                                Three Months
                                  Ended
                                  July 31, 2009
                                
                                
                                Six Months
                                  Ended
                                  July 31, 2010
                                
                                
                                Six Months
                                  Ended
                                  July 31, 2009Barnett
      Shale in Texas, USA
                                
                                Mcf/day
                                
                                
                                67
                                
                                
                                
                                56
                                
                                
                                
                                57
                                
                                
                                
                                56Deep
      Basin in Alberta, Canada
                                
                                Mcf/day
                                
                                
                                -
                                
                                
                                
                                62
                                
                                
                                
                                6
                                
                                
                                
                                66Total
      Company
                                
                                Mcf/day
                                
                                
                                67
                                
                                
                                
                                118
                                
                                
                                
                                63
                                
                                
                                
                                122Total
      Company
                                
                                Boe/day*
                                
                                
                                11
                                
                                
                                
                                20
                                
                                
                                
                                11
                                
                                
                                
                                20





*
Thousand Cubic Feet (“Mcf”) converted into Barrel of Oil Equivalent (“Boe”) on a
basis of 6:1





Net Operating
Results





Three Months
                              Ended
                              July 31, 2010
                            
                            
                            Three Months
                              Ended
                              July 31, 2009
                            
                            
                            Six Months
                              Ended
                              July 31, 2010
                            
                            
                            Six Months
                              Ended
                              July 31, 2009Volumes
                            
                            Mcf
                            
                            
                            6,159
                            
                            
                            
                            10,825
                            
                            
                            
                            11,375
                            
                            
                            
                            22,140Price
                            
                            $/Mcf
                            
                            
                            3.60
                            
                            
                            
                            3.19
                            
                            
                            $
                            5.39
                            
                            
                            
                            3.43Revenue
                            
                            
                            
                            $
                            22,169
                            
                            
                            $
                            34,584
                            
                            
                            $
                            61,362
                            
                            
                            $
                            75,984Royalties
                            
                            
                            
                            
                            13,366
                            
                            
                            
                            5,401
                            
                            
                            
                            19,640
                            
                            
                            
                            12,897Revenue,
      net of royalties
                            
                            
                            
                            
                            8,803
                            
                            
                            
                            29,183
                            
                            
                            
                            41,722
                            
                            
                            
                            63,087Production
      expenses
                            
                            
                            
                            
                            6,288
                            
                            
                            
                            31,875
                            
                            
                            
                            13,495
                            
                            
                            
                            52,576Net
                            
                            
                            
                            $
                            2,515
                            
                            
                            $
                            (2,692
                            )
                            
                            $
                            28,227
                            
                            
                            $
                            10,511


14





For the
three and six month periods ended July 31, 2010, we realized $22,169 and
$61,362, respectively, in revenue from sales of natural gas and natural gas
liquids, as compared to $34,584 and $75,984 in the same periods of the prior
year. Revenue decreased mainly due to the sale of the Wapiti property effective
April 1, 2010. Royalties as a percent of revenue were 60% and 32% for the three
and six month periods ended July 31, 2010, respectively, compared with 16% and
17% in the same periods of the prior year. Royalties increased due to natural
gas cost allowance adjustments for the previous years. Production expenses
related to this revenue were $6.13/Boe and $7.12/Boe for the three and six month
periods ended July 31, 2010, respectively, compared to $17.67/Boe and $14.25/Boe
in the same periods of the prior year. The decrease in the per Boe rate in the
three and six month period ended July 31, 2010 was mainly due to the lower
maintenance costs of wells and positive adjustments to miscellaneous operating
cost from our partner operated wells.





Depletion, Depreciation and Accretion





Three Months
                          Ended
                          July 31, 2010
                        
                        
                        Three Months
                          Ended
                          July 31, 2009
                        
                        
                        Six Months
                          Ended
                          July 31, 2010
                        
                        
                        Six Months
                          Ended
                          July 31, 2009Depletion
      – oil and gas properties
                        
                        $
                        -
                        
                        
                        $
                        7,854
                        
                        
                        $
                        -
                        
                        
                        $
                        30,345Accretion
                        
                        
                        67,316
                        
                        
                        
                        42,408
                        
                        
                        
                        131,795
                        
                        
                        
                        61,132Depletion
      and Accretion
                        
                        
                        67,316
                        
                        
                        
                        50,262
                        
                        
                        
                        131,795
                        
                        
                        
                        91,477Depreciation
      – property and equipment
                        
                        
                        6,791
                        
                        
                        
                        7,335
                        
                        
                        
                        13,864
                        
                        
                        
                        11,674Total
                        
                        $
                        74,107
                        
                        
                        $
                        57,597
                        
                        
                        $
                        145,659
                        
                        
                        $
                        103,151





Unproven
property costs of $27,189,767 (January 31, 2010 – $18,783,375) were excluded
from costs subject to depletion at July 31, 2010.





General and Administrative
(“G&A”)





Three Months
                        Ended
                        July 31, 2010
                      
                      
                      Three Months
                        Ended
                        July 31, 2009
                      
                      
                      Six Months
                        Ended
                        July 31, 2010
                      
                      
                      Six Months
                        Ended
                        July 31, 2009Salaries,
      benefits and consulting fees
                      
                      $
                      271,134
                      
                      
                      $
                      462,076
                      
                      
                      $
                      552,375
                      
                      
                      $
                      764,983Office
      costs
                      
                      
                      154,642
                      
                      
                      
                      142,278
                      
                      
                      
                      308,574
                      
                      
                      
                      303,127Professional
      fees
                      
                      
                      127,640
                      
                      
                      
                      42,910
                      
                      
                      
                      192,491
                      
                      
                      
                      183,848Public
      company costs
                      
                      
                      66,698
                      
                      
                      
                      92,962
                      
                      
                      
                      118,002
                      
                      
                      
                      185,055Operating
      overhead recoveries
                      
                      
                      65
                      
                      
                      
                      (20,469
                      )
                      
                      
                      (122
                      )
                      
                      
                      (32,328
                      )Total
      G&A
                      
                      $
                      620,179
                      
                      
                      $
                      719,757
                      
                      
                      $
                      1,171,320
                      
                      
                      $
                      1,404,685





G&A
expenses decreased in the three and six month periods ended July 31, 2010
compared to the same periods of the prior year primarily due to reduced
salaries, benefits and consulting fees and public company costs, as
follows:





·
            Salaries,
      benefits and consulting fees decreased by $190,942 and $212,608 in the
      three and six month periods, respectively, mainly due to reduced staff and
      consultants; and


·
            Public
      company costs decreased by $26,264 and $67,053 in the three and six month
      periods, respectively, mainly due to reduced investor relations costs.
      Public company costs consist mainly of fees for investor relations and
      also include directors' fees, press releases and SEC filing costs,
      printing costs and transfer agent
fees.


15





Oil and Natural Gas
Properties




Net Book Value
                            January 31,
                            2010
                          
                          
                          Additions
                          
                          
                          Depletion and
                            Impairment
                          
                          
                          Dispositions
                          
                          
                          Gain
                            (Loss)
                          
                          
                          Net Book
                            Value
                            July 31, 2009UnprovenWindsor
      Block Maritimes Shale –Nova Scotia, Canada
                          
                          $
                          18,783,375
                          
                          
                          $
                          78,233
                          
                          
                          $
                          -
                          
                          
                          $
                          -
                          
                          
                          $
                          -
                          
                          
                          $
                          18,861,608Williston
      Basin – North Dakota
                          
                          
                          -
                          
                          
                          
                          8,328,159
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          8,328,159Western
      Canadian Shale – Alberta and B.C., Canada
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          (976,900
                          )
                          
                          
                          976,900
                          
                          
                          
                          -ProvedWilliston
      Basin – North Dakota
                          
                          
                          -
                          
                          
                          
                          805,251
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          805,251Total
      Proved and Unproven
                          
                          $
                          18,783,375
                          
                          
                          $
                          9,211,643
                          
                          
                          $
                          -
                          
                          
                          $
                          (976,900
                          )
                          
                          $
                          976,900
                          
                          
                          $
                          27,995,018





During
the six month period ended July 31, 2010, we focused on land acquisitions and
drillings programs in the Williston Basin and spent $9.1 million primarily
for:





·
            acquiring
      approximately 10,000 net acres for a cost of $7.4
  million,


·
            drilling
      the Grizzly 13-6H-T147N-R104W horizontal well for a net cost of $0.3
      million,


·
            drilling
      the Grizzly 1-27H-T148N-R105W horizontal well for a net cost of $0.6
      million and


·
            acquiring
      the Grizzly 4-11-T147N-R104W oil well for $0.8
  million.





Net Cash Oil and Natural Gas
Additions:


Six Months
                          Ended
                          July 31, 2010
                        
                        
                        Six Months
                          Ended
                          July 31, 2009Net
      additions, per above table
                        
                        $
                        9,211,643
                        
                        
                        $
                        1,232,064Non-cash
      ARO additions
                        
                        
                        (14,773
                        )
                        
                        
                        (144,750
                        )Non-cash
      ARO dispositions
                        
                        
                        29,394
                        
                        
                        
                        -Changes
      in investing working capital
                        
                        
                        1,649,554
                        
                        
                        
                        1,057,464Net
      oil and gas additions, per Statements of Cash Flows
                        
                        $
                        10,875,818
                        
                        
                        $
                        2,144,778





Liquidity
and Capital Resources




As of
July 31, 2010, we had working capital of $4,178,557, resulting primarily from
cash of $2,050,357, prepaid expenses of $461,464 and other receivables of
$1,913,241, offset by payables and accrued liabilities of $246,505.





For the
six month period ended July 31, 2010, we had net cash outflow from operating
activities before changes in working capital of $1,125,693, mainly related to
$1,171,320 of cash G & A expenses. For the six month period ended July 31,
2010, we had net cash inflow from financing activities of $8,699,426 from the
issuance of 27,993,939 common shares for net proceeds of $8,464,469 and $234,957
of proceeds from 791,666 stock options that were exercised. For the six month
period ended July 31, 2010, we had net cash outflow from investing activities of
$10,875,818 which includes (i) $7,422,387 for the acquisition of approximately
10,000 net acres in the Williston Basin, (ii) $896,250 for the costs of drilling
2.0 gross (0.5 net) wells and (iii) $0.8 million for the acquisition of the
Grizzly #4-11 oil well. Net cash outflows for Nova Scotia were $107,627. Changes
to investing working capital accounted for $1,649,554, primarily due to cash
calls paid in the connection with the drilling of our two wells in the Grizzly
Project. During the six month period ended July 31, 2010, we received proceeds
from the sale of the Wapiti property of $976,900.


16





In the
Williston Basin project, we continue to seek additional undeveloped acreage,
joint venture partners and farm-in opportunities. The drilling and completion
program in the Williston Basin project commenced in the summer of 2010 and
completion of the wells is anticipated to be finalized in the fourth quarter of
fiscal 2011. We anticipate participating in the drilling of 6.0 gross (1.0 net)
wells in total for the 2011 fiscal year. Capital expenditures for the balance of
fiscal 2011 are projected at $2.0 million for the acquisition of undeveloped
lands and $3.0 million for the drilling and completion programs.





We are
currently soliciting interest from industry parties to participate in the
drilling of a test well to evaluate the recently identified seismic structure
and to participate in a joint venture to further evaluate the potential on the
Windsor Block. There is a risk we may not secure a new joint operating partner
in the Windsor Block, which could result in a slowdown or suspension of
exploration on the Windsor Block. There are no significant capital expenditures
planned for the Windsor Block in fiscal 2011.





We will
have to raise additional funds to complete the exploration and development phase
of our programs and, while we have been successful in doing so in the past,
there can be no assurance that we will be able to do so in the
future.




By
adjusting our operations to the current level of capitalization, we believe we
have sufficient capital resources to meet projected cash flow deficits in the
near term. 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.





Critical
Accounting Policies




Use of
Estimates




The
preparation of financial statements in conformity with U.S. generally accepted
accounting principles requires us to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates. We base our estimates and assumptions on
current facts, historical experience and various other factors that we believe
to be reasonable under the circumstances, the results of which form the basis
for making judgments about the carrying values of assets and liabilities and the
accrual of costs and expenses that are not readily apparent from other sources.
The actual results experienced by us may differ materially and adversely from
our estimates. To the extent there are material differences between the
estimates and the actual results, future results of operations will be
affected.





Investment in Oil and Gas
Properties




We
utilize the full cost method to account for our investment in oil and gas
properties. Accordingly, all costs associated with acquisition and exploration
of oil and gas reserves, including such costs as leasehold acquisition costs,
interest costs relating to unproven properties, geological expenditures and
direct internal costs are capitalized into the full cost pool. Investments in
unproven properties and major development projects including capitalized
interest, if any, are not amortized until proved reserves associated with the
projects can be determined. If the future exploration of unproven properties is
determined uneconomical, the amounts of such properties are added to the
capitalized cost to be amortized. The capitalized costs included in the full
cost pool are subject to a ceiling test.


17





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 obligations
is based on the current estimated 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. The costs are estimated by
management based on its knowledge of industry practices, current laws and past
experiences. The costs could increase significantly from management’s current
estimate.




Stock-Based
Compensation




We record
compensation expense in the consolidated financial statements for stock options
and deferred share units granted to employees, consultants and directors using
the fair value method. Fair values are determined using the Black Scholes option
pricing model, which is sensitive to the estimate of the Company’s stock price
volatility and the options expected life. Compensation costs are recognized over
the vesting period.


18





ITEM
3 – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK





Not
required under Regulation S-K for “smaller reporting companies.”





ITEM
4T - CONTROLS AND PROCEDURES




(a)
Evaluation of disclosure controls and procedures.




Our
management, with the participation of our Chief Executive Officer and Chief
Financial Officer, evaluated the effectiveness of our disclosure controls and
procedures pursuant to Rule 13a-15 under the Securities Exchange Act of 1934 as
of July 31, 2010. In designing and evaluating the disclosure controls and
procedures, management recognizes that any controls and procedures, no matter
how well designed and operated, can provide only reasonable assurance of
achieving the desired control objectives. In addition, the design of disclosure
controls and procedures must reflect the fact that there are resource
constraints and that management is required to apply its judgment in evaluating
the benefits of possible controls and procedures relative to their
costs.




Based
on our evaluation, our Chief Executive Officer and Chief Financial Officer
concluded that, as a result of the material weaknesses described below, our
disclosure controls and procedures are not designed at a reasonable assurance
level and are ineffective to provide reasonable assurance that information we
are required to disclose in reports that we file or submit under the Exchange
Act is recorded, processed, summarized and reported within the time periods
specified in Securities and Exchange Commission rules and forms, and that such
information is not accumulated nor communicated to our management, including our
Chief Executive Officer and Chief Financial Officer, as appropriate, to allow
timely decisions regarding required disclosure. The material weakness, which
relate to internal control over financial reporting, that was related to
segregation of duties is:




a)
            We
      did not have sufficient personnel in our accounting and financial
      reporting functions.  As a result, we were not able to achieve
      adequate segregation of duties and were not able to provide for adequate
      reviewing of the financial statements. This control deficiency, which is
      pervasive in nature, results in a reasonable possibility that material
      misstatements of the financial statements will not be prevented or
      detected on a timely basis; and




As a
result of the existence of this material weakness as of July 31, 2010,
management has concluded that we did not maintain effective internal control
over financial reporting as of July 31, 2010, based on the criteria set forth by
COSO in Internal
Control-Integrated Framework.





The
Quarterly Report does not include an attestation report of the Company’s
registered public accounting firm regarding internal control over financial
reporting. Management’s report was not subject to attestation by our registered
public accounting firm pursuant to the rules of the Securities and Exchange
Commission.





Management
will continue to monitor and evaluate the effectiveness of our disclosure
controls and procedures and our internal controls over financial reporting on an
ongoing basis and are committed to taking further action and implementing
additional enhancements or improvements, as necessary and as funds allow. As
part of this commitment, we will continue to assess our current personnel
resources. As our activities levels increase, we will look to increase our
personnel resources to increase segregation of duties. When funds are available
to us and as operations increase, we will hire additional knowledgeable
personnel to further support our current accounting personnel, which management
estimates could cost in excess of $100,000 per annum.


19




(b)
Changes in internal control over financial reporting.




We regularly
review our system of internal control over financial reporting and make changes
to our processes and systems to improve controls and increase efficiency, while
ensuring that we maintain an effective internal control environment. Changes may
include such activities as implementing new, more efficient systems,
consolidating activities, and migrating processes.




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


20


PART
II - OTHER INFORMATION





Item
1. Legal Proceedings.





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





Item
1A. Risk Factors.





Not
required under Regulation S-K for “smaller reporting companies.”





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





31.01
            Certification
      of Chief Executive Officer pursuant to Exchange Act Rules 13a-14(a) and
      15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
      2002





31.02
            Certification
      of Chief Financial Officer pursuant to Exchange Act Rules 13a-14(a) and
      15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
      2002





32.01
            Certifications
      of Chief Executive Officer and Chief Financial Officer pursuant to
      18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
      Sarbanes-Oxley Act of 2002


21




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 CORPORATIONDate:  September
      14, 2010
              By:
              /s/ PETER HILLPeter
      HillChief
      Executive Officer (Principal Executive Officer)Date:  September
      14, 2010
              By:
              /s/ JON SAMUELSJon
      SamuelsChief
      Financial Officer (Principal Financial Officer and Principal Accounting
      Officer)


22