UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549


                                  FORM 10-QSB


[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
     ACT OF 1934

     For the quarterly period ended SEPTEMBER 30, 2006

[ ]  TRANSITION REPORT PURSUANT TO 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
     1934

     For the transition period from ________ to  ________


                      Commission file number:     000-51488


                         PETROSEARCH ENERGY CORPORATION
        (Exact name of small business issuer as specified in its charter)


                NEVADA                               20-2033200
    (State or other jurisdiction of       (IRS Employer Identification No.)
     incorporation or organization)


                           675 BERING DRIVE, SUITE 200
                                HOUSTON, TX 77057
                    (Address of principal executive offices)

                                 (713) 961-9337
                           (Issuer's telephone number)

Indicate  by check mark whether the registrant is a shell company (as defined in
Rule  12b-2  of  the  Exchange  Act).   Yes [ ]  No [X]

Check  whether the issuer: (i) filed all reports required to be filed by Section
13  or  15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (ii) has been
subject  to  such filing requirements for the past 90 days.   Yes [X]  No [ ]

State the number of shares outstanding of each of the issuer's classes of common
stock, as of the latest practicable date:  31,104,570  Shares of $0.001 par
value Common Stock outstanding as of November 10, 2006


Transitional Small Business Disclosure Format (check one): Yes  [ ]  NO  [X]


<PAGE>
                         PETROSEARCH ENERGY CORPORATION

                                   FORM 10-QSB
                    FOR THE QUARTER ENDED SEPTEMBER 30, 2006

                                      INDEX


PART I - FINANCIAL INFORMATION

  ITEM 1.  FINANCIAL STATEMENTS
  ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
  ITEM 3.  CONTROLS AND PROCEDURES


PART II - OTHER INFORMATION

  ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
  ITEM 6.  EXHIBITS


SIGNATURES


<PAGE>
<TABLE>
<CAPTION>
ITEM 1.     FINANCIAL STATEMENTS

                                           PETROSEARCH ENERGY CORPORATION
                                        CONSOLIDATED CONDENSED BALANCE SHEETS
                                      SEPTEMBER 30, 2006 AND DECEMBER 31, 2005

                                                                                     SEPTEMBER 30,     DECEMBER 31,
                                                                                         2006             2005
ASSETS                                                                                (UNAUDITED)      (SEE NOTE)
------                                                                              ---------------  ---------------
<S>                                                                                 <C>              <C>
Current assets:
  Cash                                                                                   1,591,227   $    4,052,844
  Accounts receivable:
    Joint owners, net of allowance of $83,073 - Excluding Kallina well                     514,870        1,344,344
    AR Kallina well                                                                      5,237,204                -
    Oil and gas production sales                                                            65,487            9,345
  Note receivable                                                                          466,972                -
  Prepaid expenses                                                                         714,051          517,482
                                                                                    --------------------------------

    Total current assets                                                                 8,589,811        5,924,015
                                                                                    --------------------------------

Property and equipment:
Oil and gas properties, full cost method of accounting:
  Properties subject to amortization                                                    17,438,801       11,849,520
  Properties not subject to amortization                                                 8,877,244        3,513,597
  Other property and equipment                                                             149,348          147,047
                                                                                    --------------------------------

    Total property and equipment                                                        26,465,393       15,510,164

  Less accumulated depreciation, depletion and amortization                             (2,180,242)      (1,966,000)
                                                                                    --------------------------------

    Property and equipment, net                                                         24,285,151       13,544,164

Prepaid oil and gas costs                                                                   56,757           81,603

Other assets                                                                                39,072           66,462
                                                                                    --------------------------------

    Total assets                                                                    $   32,970,791   $   19,616,244
                                                                                    ===============  ===============

LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------

Current liabilities:
  Current portion of long-term debt                                                 $    2,094,631   $      908,168
  Accounts payable - Excluding Kallina well                                              1,875,160          561,546
  Accounts Payable - Kallina well                                                        4,925,289                -
  Accrued liabilities for Barnett property interest                                      4,636,584                -
  Other accrued liabilities                                                                442,962          750,036
                                                                                    --------------------------------

    Total current liabilities                                                           13,974,626        2,219,750
                                                                                    --------------------------------
Long-term debt, net of current portion                                                   2,589,811        2,537,251
Other long-term obligations                                                                659,438          670,456
                                                                                    --------------------------------
    Total liabilities                                                                   17,223,875        5,427,457

Stockholders' equity:

  Preferred stock, par value $1.00 per share, 20,000,000 shares
  authorized:
    Series A  8% convertible preferred stock, 1,000,000 shares authorized; 483,416
    shares issued and outstanding at September 30, 2006 and December 31, 2005              483,416          483,416
    Series B convertible preferred stock, 100,000 shares authorized; 43,000 shares
    issued and outstanding at September 30, 2006 and December 31, 2005                      43,000           43,000
  Common stock, par value $0.001 per share, 100,000,000 shares                              31,104           28,497
  Authorized; 31,104,570 and 28,497,761 shares issued and outstanding at
  September 30, 2006 and December 31, 2005, respectively
  Additional paid-in capital                                                            21,347,515       18,089,828
  Unissued common stock                                                                     23,075          545,000
  Accumulated deficit                                                                   (6,181,194)      (5,000,954)
                                                                                    --------------------------------

    Total stockholders' equity                                                          15,746,916       14,188,787
                                                                                    --------------------------------

    Total liabilities and stockholders' equity                                      $   32,970,791   $   19,616,244
                                                                                    ===============  ===============
</TABLE>

Note:  The balance sheet at December 31, 2005 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements.

See accompanying notes to unaudited condensed consolidated financial statements


<PAGE>
<TABLE>
<CAPTION>
                                      PETROSEARCH ENERGY CORPORATION
                                  CONSOLIDATED STATEMENTS OF OPERATIONS
                 FOR THE THREE MONTHS AND  NINE MONTHS ENDED SEPTEMBER 30, 2006 AND 2005

                                                       THREE MONTHS ENDED          NINE MONTHS ENDED
                                                          SEPTEMBER 30                SEPTEMBER 30
                                                       2006          2005          2006          2005
                                                   ------------  ------------  ------------  ------------
<S>                                                <C>           <C>           <C>           <C>
Oil and gas production revenues                    $    335,711  $    240,005  $   827,311   $ 1,617,520
                                                   ------------------------------------------------------

Operating costs and expenses:
  Lease operating and production taxes                  240,977       140,030      658,859       467,091
  Depreciation, depletion and amortization               79,614        54,738      214,242       540,684
  General and administrative                            550,075       784,005    1,845,396     2,159,950
                                                   ------------------------------------------------------

    Total costs and expenses                            870,666       978,773    2,718,497     3,167,725
                                                   ------------------------------------------------------

Operating loss                                         (534,955)     (738,768)  (1,891,186)   (1,550,205)
                                                   ------------------------------------------------------

Other income (expense):
  Interest income                                        18,775        18,995       51,858        19,410
  Interest expense                                     (137,034)      (42,333)    (340,912)     (154,286)
  Gain on sale of investment                                  -             -    1,000,000             -
                                                   ------------------------------------------------------

    Total other income (expense)                       (118,259)      (23,338)     710,946      (134,876)

      Net Income (Loss)                            $   (653,214)  $  (762,106) $(1,180,240)  $(1,685,081)
                                                   =============  ===========  ============  ============

Basic and diluted net income (loss) per
common share                                       $      (0.02)  $     (0.03) $     (0.04)  $     (0.07)
                                                   =============  ===========  ============  ============

Basic and diluted weighted average shares
outstanding                                          31,115,168    27,967,327   30,527,998    24,364,902
                                                   =============  ===========  ============  ============
</TABLE>

See accompanying notes to unaudited condensed consolidated financial statements


<PAGE>
<TABLE>
<CAPTION>
                                                  PETROSEARCH ENERGY CORPORATION
                                          CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                                           FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2006

                                               SERIES A          SERIES B
                             COMMON           PREFERRED         PREFERRED      ADDITIONAL   UNISSUED                 TOTAL STOCK-
                             STOCK              STOCK             STOCK         PAID-IN      COMMON    ACCUMULATED      HOLDERS
                       SHARES    AMOUNT   SHARES    AMOUNT   SHARES  AMOUNT     CAPITAL      STOCK       DEFICIT        EQUITY
                     ----------  -------  -------  --------  ------  -------  -----------  ----------  ------------  ------------
<S>                  <C>         <C>      <C>      <C>       <C>     <C>      <C>          <C>         <C>           <C>
Balance at
December             28,497,761  $28,497  483,416  $483,416  43,000  $43,000  $18,089,828  $ 545,000   $(5,000,954)  $14,188,787
31, 2005

Common stock
issued for cash       1,928,576    1,929                                        2,538,696                              2,540,625

Common stock
issued  for oil and     500,000      500                                          544,500   (545,000)                        -0-
gas properties

Common stock
committed for
professional                                                                                  23,075                      23,075
services

Common stock
issued - exercise       178,233      178                                          174,491                                174,669
of warrants
Net loss                                                                                                (1,180,240)   (1,180,240)
                     ------------------------------------------------------------------------------------------------------------

Balance at
September            31,104,570  $31,104  483,416  $483,416  43,000  $43,000  $21,347,515  $  23,075   $(6,181,194)  $15,746,916
30, 2006             ==========  =======  =======  ========  ======  =======  ===========  ==========  ============  ============
</TABLE>

See accompanying notes to unaudited condensed consolidated financial statements


<PAGE>
<TABLE>
<CAPTION>
                                     PETROSEARCH ENERGY CORPORATION
                                  CONSOLIDATED STATEMENT OF CASH FLOWS
                         FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2006 AND 2005

                                                                                 2006          2005
                                                                             ------------  ------------
<S>                                                                          <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES:

NET LOSS                                                                     $(1,180,240)  $(1,685,081)
ADJUSTMENTS TO RECONCILE NET LOSS TO NET CASH USED IN OPERATING
ACTIVITIES:

  Gain on sale of equity securities                                           (1,000,000)            -
  Depletion, depreciation and amortization expense                               214,242       540,684
  Amortization of other costs                                                    81,707        39,969
  Common stock and warrants issued or committed for services                       1,923        45,000
CHANGES IN OPERATING ASSETS AND LIABILITIES:
  Accounts receivable                                                            461,417       339,787
  Trade note receivable                                                         (466,972)            -
  Prepaid expenses and other assets                                             (184,174)     (142,992)
  Accounts payable and accrued liabilities                                       915,955    (1,361,071)
                                                                             --------------------------

NET CASH USED IN OPERATING ACTIVITIES                                         (1,156,142)   (2,223,704)
                                                                             --------------------------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Capital expenditures, including purchases and development of properties     (6,233,269)   (4,362,659)
  Prepayments for oil and gas properties, net                                          -      (324,331)
  Proceeds from sale of oil and gas property                                           -     2,072,002
  Proceeds from sale of equity securities                                      1,000,000             -
                                                                             --------------------------

NET CASH USED IN INVESTING ACTIVITIES                                         (5,233,269)   (2,614,988)
                                                                             --------------------------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from the sale of common stock                                       2,540,625    10,609,719
  Proceeds from exercise of warrants                                             174,669             -
  Proceeds from notes payable                                                  1,800,000     3,950,000
  Repayment of notes payable                                                    (587,500)   (3,315,000)
                                                                             --------------------------

NET CASH PROVIDED BY FINANCING ACTIVITIES                                      3,927,794    11,244,719
                                                                             --------------------------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                          (2,461,617)    6,406,027

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                               4,052,844     1,100,568
                                                                             --------------------------

CASH AND CASH EQUIVALENTS AT END OF PERIOD                                   $ 1,591,227   $ 7,506,595
                                                                             ============  ============

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
  Interest paid                                                              $   361,774   $   150,754
                                                                             ============  ============

  Income taxes paid                                                          $         -   $         -
                                                                             ============  ============
</TABLE>

 See accompanying notes to unaudited condensed consolidated financial statements


<PAGE>
                         PETROSEARCH ENERGY CORPORATION
              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

1.   INTERIM  FINANCIAL  STATEMENTS
     ------------------------------

     The  accompanying  unaudited  interim  financial  statements  have  been
     prepared  without  audit  pursuant to the rules and regulations of the U.S.
     Securities  and  Exchange  Commission.  Certain  information  and  footnote
     disclosures  normally  included  in  financial  statements  prepared  in
     accordance  with  accounting  principles  generally  accepted in the United
     States  of  America  have been condensed or omitted, pursuant to such rules
     and  regulations.  These  unaudited  consolidated  condensed  financial
     statements  should  be  read  in  conjunction  with  the  audited financial
     statements  and  notes  thereto  of  Petrosearch  Energy  Corporation  (the
     "Company")  for  the  year  ended  December  31,  2005.  In  the opinion of
     management,  all  adjustments  (consisting of normal recurring adjustments)
     considered necessary for a fair presentation of financial position, results
     of  operations  and  cash flows for the interim periods presented have been
     included.  Operating  results  for  the interim periods are not necessarily
     indicative  of  the  results  that  may be expected for the respective full
     year.

2.    INCOME  TAXES
      -------------

     The  Company  uses  the  liability  method  in accounting for income taxes.
     Under this method, deferred tax assets and liabilities are determined based
     on  differences between financial reporting and income tax carrying amounts
     of  assets and liabilities and are measured using the enacted tax rates and
     laws that will be in effect when the differences are expected to reverse. A
     valuation allowance, if necessary, is provided against deferred tax assets,
     based  upon  management's  assessment  as  to  their  realization.

     The  difference  between  the  35%  federal  statutory  income tax rate and
     amounts shown in the accompanying interim financial statements is primarily
     attributable  to the utilization of net operating loss carry-forwards and a
     valuation  allowance  recorded  against  net  deferred  tax  assets.

3.   INTERESTS  IN  OIL  AND  GAS  PROPERTIES
     ----------------------------------------

     BARNETT  SHALE  PROJECT,  5  COUNTIES,  TEXAS

     On  August  29,  2006,  the  Company  entered  into  a  Second  Amended and
     Restated  Program  Agreement  with  Harding  (the "Second Amendment") under
     which  it  received  a  fixed  14% working interest in the existing Project
     leases.  The  assignment by Harding to the Company shall be subject only to
     applicable  royalty and overriding royalty burdens described in the Amended
     Program  Agreement.  The interest acquired relative to the Second Amendment
     is  an  un-promoted  interest  which  eliminates  the  Company's  previous
     obligations  to advance a significant amount of costs on behalf of Harding.
     The  Company's  cost  bearing interest in all future acquisition, drilling,
     completion  and  operating  costs shall also remain fixed at an un-promoted
     14%.

     Pursuant  to  the  terms  of  the  Second  Amendment,  in  October 2006 the
     Company  paid  accrued drilling and operating obligations for the months of
     May  and  June  2006  in  the  amount of $875,605 and have committed to pay
     $1,635,725  related to lease acquisition costs for May and June paid for by
     ExxonMobil  and  lease-banked. The Company anticipates the $1,635,725 to be
     due  in  December  2006.  As  of September 30, 2006, the Company's share of
     total  property costs associated with its 14% fixed interest is $7,461,560,
     $4,636,584  of  which was unpaid and included as a current liability in the
     accompanying  balance  sheet  as  of  September  30,  2006.

     The  Company  continues  to  work  directly  with  Exxon  Mobil Corporation
     and Harding Company to form the integrated venture for the project for both
     upstream  and  gathering  system  assets  under  the  previously  announced
     non-binding  "Heads of Agreement". Subsequent to the third quarter of 2006,
     the  Company assigned its interests in the Barnett Shale leases to a wholly
     owned  subsidiary,  Barnett  Petrosearch, LLC which will hold the Company's
     interest  in  the  integrated  venture  when  and  if  it  is  formed.


<PAGE>
SOUTHWEST GARWOOD PROJECT, COLORADO COUNTY, TEXAS
-------------------------------------------------

     With  regard  to  the  SW  Garwood  Project,  on  September  21,  2006, the
     Company  entered  into a Second Amendment to the Petrosearch-Rock Agreement
     and  an  Option  Agreement  with  all  other working interest owners in the
     Project  to  resolve  certain  disputes.  Under the collective terms of the
     Second  Amendment and the Option Agreement, Rock Energy Partners Operating,
     L.P ("Rock"), the defaulting working interest owner, was granted a two-week
     time  period to settle its outstanding obligation on the Kallina 46 #1 well
     totaling  approximately $7.5 million. The funds were not received from Rock
     in  the  allotted  two  week  time period, which gave the Company an option
     period  under  which  it  was  able  to  acquire the interest from Rock the
     Kallina  lease.

     On  November  1,  2006,  the  Company exercised the option under the Option
     Agreement  with  Rock,  upon  which  exercise,  it  acquired a 100% working
     interest  (68%  after  payout  working  interest)  from Rock in the Anthony
     Kallina,  et  al  lease  covering  438.16  acres together with the existing
     Kallina  46  #1  well  in  the  Southwest Garwood Field of Colorado County,
     Texas.  As  part  of  this  transaction,  the Company gave up a 20% working
     interest  in  240  acres  and  a 21.5% after payout working interest in 445
     acres.  In  connection  with  the exercise of the option and acquisition of
     these interests into the newly formed subsidiary, Garwood Petrosearch, Inc.
     ("Garwood"),  Garwood  executed a Securities Purchase Agreement and Secured
     Term  Note  with  Laurus Master Fund, Ltd. ("Laurus") for Laurus to provide
     financing  for  payment  of  Rock's  accrued  and unpaid vendor obligations
     related to the drilling of the Kallina 46 #1 well and payment of the future
     completion  costs  for  the Kallina 46 #1 well which is in process of being
     completed.  Garwood was formed to hold the Kallina Lease and the Kallina 46
     #1  well  acquired  from  Rock.

     As  a  part  of  the  financing  arrangement,  Garwood  issued  Laurus  a
     Warrant  to acquire, upon payout of the Note indebtedness, 45% of Garwood's
     outstanding  common  stock  such that upon exercise of the Warrant, Garwood
     would  be  owned  55%  by  us  and  45% by Laurus and the sole asset is the
     Kallina  lease  acquired  from  Rock.  Advances  under  the Note shall bear
     interest  at Wall Street Journal Prime plus 2% with a minimum interest rate
     of  8%  and a maximum interest rate of 15%. Payments under the Note will be
     paid  from 90% of net production revenues beginning on the earlier to occur
     of  (i)  receipt  of actual proceeds from production from the Kallina 46 #1
     well  and  (ii)  a  date  which  is  120 days after the closing date of the
     transaction  and requires a minimum monthly payment of $100,000 of which we
     are  now  obligated  for  $87,500  as  a result of the sale of 12.5% of the
     interest  as described immediately below. Upon any event of default, Laurus
     would  be  entitled to receive 100% of the net production revenues relating
     to oil and gas properties of Garwood. There were no Company warrants issued
     related  to  this  transaction.  The  Note  is collateralized solely by the
     recently  acquired  interest  in  the  Kallina  46  #1 well and the related
     Section  46  acreage,  and  has  no  other  recourse  to  the  Company.

     On  November  13,  2006,  Garwood  farmed  out  a 12.5% working interest in
     the  Kallina  lease  and the Kallina 46 #1 well to an industry partner on a
     heads  up  basis.  Garwood retains an 87.5% working interest in the Kallina
     lease and the Kallina 46 #1 well before payout and a 59.5% working interest
     after  payout.

     In  the  SW  Garwood  project,  as  a result of the exercise of this option
     and  the sale of the interest in the entire SW Garwood Project, Petrosearch
     entities  now  own  a 16% working interest in 640 acres; a 16% after payout
     working  interest  in 640 acres; and an 87.5% before payout and 75.5% after
     payout  working  interest  in  438  acres.

NORTH  TEXAS/PANHANDLE  WATER  FLOOD  PROJECT
---------------------------------------------

     In  November  2005,  the  Company  acquired  a  100%  working  interest  in
     1,755 acres in the Quinduno Field in Roberts County, Texas, in the Anadarko
     Basin.  The  Company's  working  interest  reduces  to 90% at payout, which
     includes  the  cost  of  acquisition.  Proved reserves net to the Company's
     interest  are  estimated  by  Ryder Scott to be 2.0 MMbo and 1.1 Bcf of gas
     with  an  SEC  PV-10  value  of  $33.7  million (at December 31, 2005). The
     purchase price (in November 2005) equated to $3.37 per proved barrel of oil
     equivalent (boe) based on a conversion factor of 6 Mcf/bo. As operator, the
     Company  intends  to  extract the reserves through conventional water flood
     technology.  The  first  phase  of the project began in March 2006 with the
     drilling of a new well, the Maddox #42, for production, to a depth of 4,495
     feet.  The well was completed April 13, 2006 in a small, previously unseen,
     zone  below  the water flood target; initial production was encouraging but
     subsequently


<PAGE>
     declined  to  a  less than commercial rate. The Company plans to recomplete
     the  well  in the water flood zone at a depth of 4100 feet. The Company has
     an  ongoing  program  to  enter  each  of  the  20 wells that have not been
     plugged.  So  far,  the  Company  has  entered  7  of  these older wells to
     determine  their  mechanical  status and produce whatever oil or gas we can
     while  working  on  the  water  flood  design. Two of these wells have been
     equipped  and  are  now  producing.  The  Company  is presently preparing a
     detailed  study  and  development  plan  for  the  field  and  have  filed
     application for a permit to use the Ogallala freshwater aquifer as a source
     for  the  injection  program.  As  of  this filing, the Company has reached
     agreement  in  principle with a landowner to allow the Company to drill for
     and  extract  water from a water well to be drilled on a 560 acre parcel in
     the  field  and  has been notified by the staff of the local water district
     that  they  will  recommend  that  the district Board approve the Company's
     permit  application.  We  are in final discussion with a potential industry
     partner  to  participate  in  the  development  of  the  field.

4.   STOCK  WARRANTS
     ---------------

     In  the  past,  the  Company  has  periodically  issued  incentive  stock
     warrants  to  officers,  executives,  directors, and consultants to provide
     additional  incentives to promote the success of the Company's business and
     to  enhance  the  ability  to  attract and retain the services of qualified
     persons.  The  issuance  of such warrants has been approved by the Board of
     Directors.  The  exercise  price  of a warrant granted is determined by the
     fair  market  value  of  the  stock  on  the  date  of  grant.

     In  December  2004,  the  FASB  issued  SFAS 123(R), which is a revision of
     SFAS  123.  SFAS  123(R)  requires  all  share-based payments to employees,
     including  grants  of  employee  stock  warrants,  to  be  recognized  as
     stock-based  compensation  expense in the Company's Consolidated Statements
     of  Operations based on their fair values. Proforma disclosure is no longer
     an  alternative,  as  was  permitted by SFAS 123. Until the adoption of the
     provisions of SFAS 123(R) on January 1, 2006, the Company elected to follow
     Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
     Employees"  (APB  25)  and  related  Interpretations  in accounting for its
     employee  stock  options  and  warrants  because the alternative fair value
     accounting  provided  for  under  FASB  Statement  No. 123, "Accounting for
     Stock-Based  Compensation",  required  use  of option valuation models that
     were  not  developed for use in valuing employee stock options or warrants.
     Under  APB  25,  if  the  exercise  price  of  the Company's employee stock
     warrants  is  greater  than  or equal to the market price of the underlying
     stock  on  the  date  of  grant,  no  compensation  expense was recognized.

     The  adoption  of  SFAS  123(R)  has  not  resulted  in  any  compensation
     charges  in  2006  related  to  warrants  outstanding at December 31, 2005,
     because  all  employee  stock warrants were vested as of December 31, 2005.
     There  was  no  compensation  expense  related to warrants during the three
     month  periods  ended  September  30,  2006  and  2005.

     Although  it  is  no  longer  required, due to the adoption of SFAS 123(R),
     proforma  information  regarding  net  income  and  earnings  per share was
     required  by  Statement 123 and 148 (included for purposes of 2005 proforma
     comparison),  and  has  been determined as if the Company had accounted for
     its  employee  stock  warrants  under  the  fair  value  method  of  these
     Statements. For warrants granted to employees or directors during the three
     months  ended  September 30, 2006 and 2005, the fair value of such warrants
     was  estimated  at  the  date of grant using a Black-Scholes option-pricing
     model  with  the  following  assumptions:

<TABLE>
<CAPTION>
                           SEPTEMBER 30,   SEPTEMBER 30,
                               2006            2005
                          --------------  --------------
<S>                       <C>             <C>
     Dividend yield           - 0 -           - 0 -

     Expected volatility       98%            180 %

     Risk free interest       3.00%        2.25% - 2.50%

     Expected lives         2 - 4 years     2 - 4 years
</TABLE>


<PAGE>
     The  Black-Scholes  option  valuation  model  was  developed  for  use  in
     estimating  fair  value  of traded options or warrants that have no vesting
     restrictions  and  are  fully  transferable.  In addition, option valuation
     models  require  the  input  of highly subjective assumptions including the
     expected  stock  price  volatility.  Because  the  Company's employee stock
     warrants  have characteristics significantly different from those of traded
     warrants,  and  because  changes  in  the  subjective input assumptions can
     materially  affect  the  fair  value estimate, in management's opinion, the
     existing models do not necessarily provide a reliable single measure of the
     fair  value  of  its  employee  stock  warrants.

     For  purposes  of  proforma  disclosures,  the  estimated fair value of the
     warrants is included in expense over the vesting period or expected life of
     the  warrant.

<TABLE>
<CAPTION>
                              THREE MONTHS    THREE MONTHS    NINE MONTHS    NINE MONTHS
                                 ENDED           ENDED           ENDED          ENDED
                              SEPTEMBER 30,   SEPTEMBER 30,  SEPTEMBER 30,  SEPTEMBER 30,
                             --------------  --------------  -------------  -------------
                                  2006            2005           2006           2005
                             --------------  --------------  -------------  -------------
<S>                          <C>             <C>             <C>            <C>
Net loss, as reported        $    (653,214)  $    (762,106)  $ (1,180,240)  $ (1,685,081)

Less stock-based
compensation calculated in
accordance with SFAS 123                 -         (25,160)             -       (855,335)
                             --------------  --------------  -------------  -------------
Proforma net loss            $    (653,214)  $    (787,266)  $ (1,180,240)  $ (2,540,416)
                             ==============  ==============  =============  =============
Basic and fully diluted net
loss per common share, as
reported                     $       (0.02)  $       (0.03)  $      (0.04)  $      (0.07)
                             ==============  ==============  =============  =============
Basic and fully diluted
proforma net loss per
common share                 $       (0.02)  $       (0.03)  $      (0.04)  $      (0.10)
                             ==============  ==============  =============  =============
</TABLE>

     A summary of the Company's warrant activity and related information for the
     nine  months  ended  September  30,  2006  follows:

<TABLE>
<CAPTION>
                                                      WEIGHTED
                          NUMBER OF                   AVERAGE
                        SHARES UNDER     EXERCISE     EXERCISE
                           WARRANT         PRICE        PRICE
                        -------------  -------------  ---------
<S>                     <C>            <C>            <C>
Balance outstanding at
  December 31, 2005        8,495,058   $  0.98-$9.75  $    3.57

  Issued                   1,060,714   $        2.00  $    2.00
  Exercised                 (178,233)  $        0.98  $    0.98
  Expired                 (1,067,927)  $0.98 - $1.63  $    1.35
                        -------------

Balance outstanding at
  September 30, 2006       8,309,612   $  0.98-$9.75  $    3.71
                        =============
</TABLE>


<PAGE>
     A  summary  of  outstanding  stock  warrants  at  September  30, 2006 is as
     follows:

<TABLE>
<CAPTION>
                                                               WEIGHTED
      NUMBER OF                      REMAINING                  AVERAGE
     COMMON STOCK                    CONTRACTED    EXERCISE    EXERCISE
     EQUIVALENTS   EXPIRATION DATE  LIFE (YEARS)     PRICE       PRICE
     ------------  ---------------  ------------  -----------  ---------
<S>                <C>              <C>           <C>          <C>

        1,076,922   November 2006            .17  $      9.75  $    9.75
          211,541   February 2007           1.42  $      9.75  $    9.75
           30,770      March 2007            .50  $      9.75  $    9.75
          300,004      April 2007            .59  $      9.75  $    9.75
          161,538        May 2007            .67  $6.50-$9.75  $    7.27
           76,923       July 2007            .75  $5.20-$6.50  $    6.24
          269,231  September 2007            .92  $4.88-$5.20  $    5.15
          100,000   November 2007           1.17  $      2.00  $    2.00
          150,000      March 2008           1.50  $      1.95  $    1.95
           20,000     August 2008           1.87  $      1.95  $    1.95
        4,851,969   November 2008           2.17  $ .98-$1.95  $    1.93
        1,060,714   February 2009           2.41  $      2.00  $    2.00
     ------------

        8,309,612
     ============
</TABLE>

5.   RELATED  PARTY  TRANSACTIONS
     ----------------------------

     During  the  three  months  ended  September 30, 2006 there were no related
     party  transactions.

6.   NON-CASH  INVESTING  AND  FINANCING  ACTIVITIES
     -----------------------------------------------

     During  the  nine  months  ended  September  30, 2006 and 2005, the Company
     engaged  in  non-cash  financing  and  investing  activities  as  follows:

<TABLE>
<CAPTION>
                                                                          2006      2005
                                                                       ----------  -------
<S>                                                                    <C>         <C>
     Transfer of vehicle for reduction of liability                    $        -  $15,346
                                                                       ==========  =======

     Reduction of prepaid drilling for development of oil and gas
     properties                                                        $   24,846  $ 6,557
                                                                       ==========  =======

     Increase in accounts payable for property costs                   $  560,530  $93,794
                                                                       ==========  =======

     Increase in accrued liabilities for Barnett Shale property costs  $4,636,584  $     -
                                                                       ==========  =======

     Transfer of overriding royalty interest for debt issuance costs   $        -  $89,609
                                                                       ==========  =======

     Issuance of warrants with debt financing                          $        -  $88,422
                                                                       ==========  =======

     Cancellation of warrants for reduction of note receivable         $        -  $88,392
                                                                       ==========  =======

     Issuance of common stock for deferred board compensation          $        -  $15,000
                                                                       ==========  =======

     Increase in accounts payable for JIB receivable - Kallina         $4,925,289  $     -
                                                                       ==========  =======
</TABLE>

7.   EARNINGS  PER  SHARE
     --------------------

     The  Company  has  adopted  SFAS  No.  128,  which provides for calculation
     of  "Basic"  and  "Diluted"  earnings  per  share. Basic earnings per share
     includes  no  dilution  and is computed by dividing net income available to
     common  shareholders  by the weighted average common shares outstanding for
     the  period.  Diluted  earnings per share reflect the potential dilution of
     securities  that  could share in the earnings of an entity similar to fully
     diluted earnings per share. Following is a reconciliation of the numerators
     and  denominators  of  the basic and diluted EPS computations for the three
     and  nine  months  ended  September  30,  2006  and  2005:

<TABLE>
<CAPTION>
                                       Three Months Ended          Nine Months Ended
                                          September  30,             September  30,
                                       2006          2005          2006          2005
                                   ------------------------------------------------------
<S>                                <C>           <C>           <C>           <C>
     Basic EPS:
     Net income (loss)             $  (653,214)  $  (762,106)  $(1,180,240)  $(1,685,081)
     Less: Preferred stock
     dividends                          (9,668)       (9,668)      (29,005)      (29,005)
                                   ------------------------------------------------------
     Net income (loss) available
     to common stockholders        $  (662,882)  $  (771,774)  $(1,209,245)  $(1,714,086)
                                   ======================================================

     Weighted average shares
     of common stock                31,115,168    27,967,327    30,527,998    24,364,002
                                   ======================================================

     Basic net income (loss)
     per share                     $     (0.02)  $     (0.03)  $     (0.04)  $     (0.07)
                                   ======================================================

     Diluted EPS:
     Income (loss) available to
     common stockholders           $  (662,882)  $  (771,774)  $(1,209,245)  $(1,714,086)
     Plus assumed conversions                -             -             -             -
                                   ------------------------------------------------------
     Net income (loss) used for
     diluted EPS                   $  (662,882)  $  (771,774)  $(1,209,245)  $(1,714,086)
                                   ======================================================

     Weighted average shares
     of common stock                31,115,168    27,967,327    30,527,998    24,364,902
     Plus effect of dilutive
     securities:
      Warrants                               -             -             -             -
     Convertible preferred stock             -             -             -             -
                                   ------------------------------------------------------
     Weighted average shares
     used for Diluted EPS           31,115,168    27,967,327    30,527,998    24,364,902
                                   ======================================================

     Diluted net income (loss)
     per share                     $     (0.02)  $     (0.03)  $     (0.04)  $     (0.07)
                                   ======================================================
</TABLE>

     For  the  nine  month  period  ended September 30, 2006, potential dilutive
     securities  had  an  anti-dilutive  effect  and  were  not  included in the
     calculation of diluted net loss per common share. These securities included
     in-the-money  warrants  for  the  purchase  of  84,280  common  shares  and
     preferred stock convertible into 94,465 common shares. For the three months
     ended  September  30,  2006,  these  securities  included  preferred  stock
     convertible  into 94,218 common shares. For the nine months ended September
     30,  2005, these securities included in-the-money warrants for the purchase
     of 868,376 common shares and preferred stock convertible into 94,218 common
     shares.  For  the  three  months ended September 30, 2005, these securities
     included  in-the-money  warrants  for the purchase of 851,282 common shares
     and  preferred  stock  convertible  into  94,218  common  shares.

<PAGE>

8.   OTHER  INCOME
     -------------

     On  May  5,  2006  the  Company  sold  its 1,500,000 shares of Texcom Stock
     for a total of $1,000,000. The Company acquired the shares in November 2003
     pursuant  to  a  merger  and  a  sale  of  a  subsidiary.

9.   SUBSEQUENT  EVENTS
     ------------------

     Please  see  Footnote  number  3.  INTERESTS  IN OIL AND GAS PROPERTIES for
                                        ------------------------------------
     several  subsequent  events related the Southwest Garwood Project, Colorado
     County,  Texas.

     On  October  16,  2006,  the  Company  entered  into  a Letter Agreement to
     amend  its  existing  revolving  credit  facility  with  Fortuna Energy, LP
     ("Fortuna").  The  principal  available  under the revolving borrowing base
     remains  $10,000,000.  Under the terms of the transaction, Fortuna advanced
     the  Company $780,000 for the purpose of paying amounts due for the Barnett
     Shale  Project.  As  part  of the financing, the Company pledged additional
     interests  in  its  oil  and  gas  properties  as  collateral.

     In  addition,  the  Company  agreed  to  issue to Fortuna 475,000 five year
     warrants  with  a  strike  price  of  $0.92 per share (the "Warrants"). The
     Warrants  will  contain a "put" provision which will allow Fortuna to "put"
     the  warrants  to  the  Company  at  a price of $0.65 per share for two (2)
     years, which "put" period shall commence 180 days after the issuance of the
     Letter  Agreement.  The  Warrants  have  piggyback  registration  rights.
     Additionally,  as  part  of  the  transaction,  the Company agreed to issue
     100,000  new  warrants, which expire five (5) years from the date of issue,
     at  a  price  of  $0.92  per  share (the "Replacement Warrants") to replace
     100,000  warrants  previously  issued  to  Fortuna  at a price of $2.00 per
     share,  which  were  previously  set  to  expire  on  November 1, 2007. The
     Replacement  Warrants  also  have  piggyback  registration  rights.

     The  Company  signed  a  commitment  letter  for  a  short term bridge debt
     facility  on  September  26,  2006 with Macquarie Bank Limited ("Macquarie)
     which  commitment letter has since expired on October 16, 2006. The Company
     continues  to  negotiate  with  Macquarie regarding the loan facility in an
     effort  to  evaluate  how,  and  if,  the short term facility will meet the
     Company's  capital  needs.


<PAGE>
ITEM 2.     MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS

                           FORWARD LOOKING STATEMENTS

Statements contained herein and the information incorporated by reference herein
may  be  forward-looking  statements  within  the  meaning of Section 21E of the
Securities Exchange Act of 1934 (the "Exchange Act"). Forward-looking statements
can  be  identified  by  the use of forward-looking terminology such as, but not
limited  to,  "may,"  "will,"  "expect,"  "anticipate,"  "estimate," "would be,"
"believe,"  or  "continue"  or  the  negative  or other variations of comparable
terminology.  We  intend  such  forward-looking  statements to be covered by the
safe  harbor  provisions  applicable  to forward-looking statements contained in
Section 21E of the Exchange Act. Such statements (none of which is intended as a
guarantee  of  performance)  are  subject  to  certain  assumptions,  risks  and
uncertainties,  which  could  cause  our  actual future results, achievements or
transactions  to  differ  materially  from  those projected or anticipated. Such
risks  and  uncertainties  are  set  forth  herein.

Forward-looking  statements  include  statements  concerning  plans, objectives,
goals,  strategies, future events, or performance and underlying assumptions and
other  statements,  which  are  other than statements of historical facts. These
statements are subject to uncertainties and risks including, but not limited to,
product  and  service  demands  and  acceptance, changes in technology, economic
conditions, the impact of competition and pricing, and government regulation and
approvals.  Petrosearch  cautions  that  assumptions, expectations, projections,
intentions,  or  beliefs about future events may, and often do, vary from actual
results and the differences can be material. Some of the key factors which could
cause  actual  results to vary from those Petrosearch expects include changes in
natural  gas  and  oil  prices,  the  timing  of  planned  capital expenditures,
availability  of  acquisitions,  uncertainties in estimating proved reserves and
forecasting  production  results, operational factors affecting the commencement
or  maintenance  of  producing  wells,  the  condition  of  the  capital markets
generally,  as  well  as our ability to access them, and uncertainties regarding
environmental  regulations  or  litigation  and  other  legal  or  regulatory
developments  affecting  our  business.

Our  expectations,  beliefs  and projections are expressed in good faith and are
believed  to  have  a  reasonable  basis,  including  without  limitation,  our
examination  of  historical  operating trends, data contained in our records and
other  data  available  from  third parties. There can be no assurance, however,
that  our  expectations,  beliefs or projections will result, be achieved, or be
accomplished.  Readers  are  cautioned  not  to  place  undue  reliance on these
forward-looking  statements,  which  speak  only  as  of  the  date  hereof.  We
undertake  no  duty  to  update  these  forward-looking  statements.

OVERVIEW  -  CORPORATE  STRATEGY

We  are  a  resource  based energy company with operations focused in three core
areas  of  the  lower  48  states of the United States. Our strategic goal is to
build  intrinsic  shareholder  value through; 1) focused operations in our three
core  property  areas, and 2) maintaining a low cost structure at every level of
our  Company.

Our  near  term  goal  is  to  bring additional production and revenues from our
existing  resource  base.  We  see  tangible  progress  in  achieving  our goal.
Specifically:

     -    In October  2006,  we  undertook  certain  remedial work on our Gruman
          property  in North Dakota. As a result of this work, our production on
          this  property  has  an  average  rate  of  60  barrels of oil and oil
          equivalent  per  day ("boepd") during the third quarter of 2006, which
          has  increased over the 45 day period after the end of the quarter. We
          are currently assessing the sustainability of the production increase.
          We  now  own  an  85%  working  interest in this well. Once we receive
          permit  approval  for  water  injection  on this property and pressure
          maintenance  is  initiated, we expect further production increases. We
          expect  approval  by  year  end.

     -    During  the  month  of  December  2006  we  expect  to  complete  our
          Kallina  46  #1  well.  Petrosearch  entities now own an 87.5% working
          interest  in  this  well  before  payout  and  75.5%  after payout. As


<PAGE>
          we  announced  previously,  this well has encountered in excess of 250
          feet of potentially net productive pay in multiple sands in the Upper,
          Middle  and  Lower  Wilcox.

     -    In January  of  2007  we  anticipate  initiating  production  from the
          five  wells  we  have  drilled to date, the one currently drilling and
          possibly  another  well to be drilled prior to year end in the Barnett
          Shale  project. A multi-rig continuous drilling program is planned for
          2007  and  2008.

Over  the past two years we have assembled an inventory of high quality drilling
opportunities in our focus areas. We now have seven development locations on our
Wilcox  properties  and 38 locations for development on our Quinduno waterflood.
In the Barnett Shale project we have accumulated an important leasehold position
inside our 5 county Area of Mutual Interest with numerous locations. A multi-rig
program  is  planned  for  the  area  over  the  next  several years. We are now
embarking  on an aggressive program to exploit this inventory for the benefit of
our shareholders. Accordingly, a majority of effort over the next 18 months will
be  focused  on  growth  through  the  drill  bit  in  our  three  core  areas:

          -    The Barnett  Shale  project  with  ExxonMobil;
          -    The Texas  Panhandle  water  flood  that  we  operate;  and
          -    Development  of  the  Garwood  field  in  the  Wilcox  trend  of
               South  Texas  that  we  operate.

We  are also maintaining a low cost structure. Our finding and development costs
for  the  year  ended  12/31/05 were $3.60 per barrel of oil equivalent ("boe").
During  that  same  period  our  total proved reserves expanded 3.9 times and we
finished the year with 2.5 Million boe. Added to this base of proved reserves is
another  7.1 million boe of probable and possible reserves. We have not included
any  of the reserves that we expect to realize from wells drilled to date in the
Barnett  Shale  project or the Kallina 46 #1 well in the aforementioned figures.
We  also maintain tight control on our corporate overheads and have low relative
lease  operating  costs  in  our  core  property  areas.

LIQUIDITY  AND  CAPITAL  RESOURCES

The  significant decrease in our working capital from $3,704,265 at December 31,
2005  to  $(5,384,815)  at  September  30,  2006  is  the  result  of 1) accrued
liabilities  of $4.6 million for our interest in the Barnett Shale properties of
which $875,000 has been paid subsequent to the end of the third quarter with the
balance  expected  to be paid in full and on time through financings that are in
late  stage  negotiations  with  institutional  investors; 2) an increase in the
current  portion  of our long term debt; and 3) decreased cash that was used for
capital  expenditures,  and  general  working  capital.

We  have  primarily financed our operating and investing cash flow needs through
private  offerings of equity securities, sales of crude oil and natural gas, and
the  use  of  debt  instruments such as revolving credit facilities.  We believe
that  given  our  increased production (See Gruman Prospect, Stark County, North
Dakota  below),  existing  debt facilities and capital raising efforts currently
underway  we  will have the ability to provide the capital needed to develop our
Projects.

Our  financing strategy is to use various debt related financings that recognize
specific  property risks and their economic attributes. We are executing on this
strategy.  We  recently closed an $8.3 million financing with Laurus Master Fund
for  the  purchase of a 100% working interest before payout in the Kallina 46 #1
well,  and the associated 438 acre lease, in the Garwood field (and subsequently
farmed  out  a 12.5% working interest and reduced the borrowing by approximately
$1  million).  Recourse  under this facility is only to the Kallina well and the
leases  which  it  holds.  We  did not issue any common stock or warrants in our
Company  in  conjunction  with  this  financing.  We are working towards a joint
venture  for  the  development  of  our Quinduno water flood property. We do not
anticipate  having  to  issue  any  common  stock  or warrants in our Company in
association  with  this  possible  transaction.  We  are also working on various
financing  strategies  for  our  Barnett  Shale  project.


<PAGE>
PRIVATE  PLACEMENTS

In  February  2006,  we completed sales of $2.7 million of our common stock in a
private offering.  We received net proceeds of approximately $2.54 million which
were  for  general corporate purposes, including the drilling of projects in our
prospect  inventory.

SPECIFIC  PROJECT  FINANCING  -  SW  GARWOOD  PROJECT

With  regard to the SW Garwood Project, on September 21, 2006, we entered into a
Second  Amendment to the Petrosearch-Rock Agreement and an Option Agreement with
all  other  working  interest owners in the Project to resolve certain disputes.
Under  the  collective  terms  of the Second Amendment and the Option Agreement,
Rock  Energy  Partners  Operating, L.P ("Rock"), the defaulting working interest
owner,  was  granted a two-week time period to settle its outstanding obligation
on  the  Kallina 46 #1 well totaling approximately $7.5 million.  The funds were
not  received  from  Rock in the allotted two week time period, which gave us an
option  period  under which we were able to acquire the Kallina lease from Rock.

On  November  1,  2006,  we exercised the option under the Option Agreement with
Rock, upon which exercise, we acquired a 100% working interest (68% after payout
working  interest) from Rock in the Anthony Kallina, et al lease covering 438.16
acres  together  with  the  existing Kallina 46 #1 well in the Southwest Garwood
Field  of Colorado County, Texas.  As part of this transaction, we gave up a 20%
working  interest  in 240 acres and a 21.5% after payout working interest in 445
acres.  In  connection  with the exercise of the option and acquisition of these
interests  into  our  newly  formed  subsidiary,  Garwood  Petrosearch,  Inc.
("Garwood"),  Garwood  executed a Securities Purchase Agreement and Secured Term
Note  with  Laurus Master Fund, Ltd.  ("Laurus") for Laurus to provide financing
for  payment  of  Rock's  accrued  and  unpaid vendor obligations related to the
drilling  of  the  Kallina 46 #1 well and payment of the future completion costs
for  the  Kallina  46  #1 well which is in process of being completed.   Garwood
was  formed  to  hold the Kallina Lease and the Kallina 46 #1 well acquired from
Rock.

As  a  part  of  the  financing  arrangement, Garwood issued Laurus a Warrant to
acquire,  upon  payout  of  the  Note indebtedness, 45% of Garwood's outstanding
common  stock such that upon exercise of the Warrant, Garwood would be owned 55%
by  us  and  45% by Laurus and the sole asset is the Kallina lease acquired from
Rock.  Advances  under the Note shall bear interest at Wall Street Journal Prime
plus  2%  with a minimum interest rate of 8% and a maximum interest rate of 15%.
Payments  under  the  Note  will  be  paid  from  90% of net production revenues
beginning  on  the  earlier  to  occur  of  (i)  receipt of actual proceeds from
production  from  the Kallina 46 #1 well and (ii) a date which is 120 days after
the  closing  date  of the transaction and requires a minimum monthly payment of
$100,000  of  which  we are now obligated for $87,500 as a result of the sale of
12.5% of the interest as described immediately below. Upon any event of default,
Laurus would be entitled to receive 100% of the net production revenues relating
to  oil  and  gas  properties  of Garwood. There were no Company warrants issued
related  to  this transaction. The Note is collateralized solely by the recently
acquired  interest in the Kallina 46 #1 well and the related Section 46 acreage,
and  has  no  other  recourse  to  the  Company.

On November 13, 2006, Garwood farmed out a 12.5% working interest in the Kallina
lease  and  the  Kallina  46 #1 well to an industry partner on a heads up basis.
Garwood  retains  an 87.5% working interest in the Kallina lease and the Kallina
46  #1  well  before  payout  and  a  59.5%  interest  after  payout.

As  a  result of the exercise of this option and the sale of the interest in the
entire  SW  Garwood Project, Petrosearch entities now own a 16% working interest
in  640  acres;  a  16% after payout working interest in 640 acres; and an 87.5%
before  payout  and  74.5%  after  payout  working  interest  in  438  acres.

CREDIT  FACILITIES

On  October  16,  2006, we entered into a Letter Agreement to amend our existing
revolving credit facility with Fortuna Energy, LP. The principal available under
the  revolving  borrowing  base  remains $10,000,000, with a current outstanding
balance of $5,222,500.   Under the terms of the transaction, Fortuna advanced us
$780,000  for  the  purpose of paying amounts due for the Barnett Shale Project.
As  part  of  the  financing,  we  provided  Fortuna  additional collateral.  In
addition, we agreed to issue to Fortuna 475,000 five year warrants with a strike
price  of  $0.92  per  share.  The Warrants contain a "put" provision which will
allow Fortuna to "put" the warrants to the Company at a price of $0.65 per share
for  two years, which "put" period shall commence 180 days after the issuance of
the  Letter  Agreement.  The  Warrants


<PAGE>
have  piggyback  registration  rights.

Although we signed a commitment letter on September 26, 2006 with Macquarie Bank
Limited  ("Macquarie)  which commitment letter has since expired, we continue to
negotiate  with  Macquarie  to  provide  a  loan  facility  that  is in the best
interests  of  the  Company's  capital  needs.

OTHER  FINANCING  OPPORTUNITIES

We  are  currently  in  discussions  with  several investment groups which could
result in additional sources of capital which will enable us to develop the high
quality  projects  in  our  inventory and fund our working capital needs. We are
also  in the process of developing industry relationships to participate in both
our  core  and  exploration  prospects  and  projects.  Management believes this
reduces  our capital risk and increase the diversity of the projects in which we
use  our  own capital.  We intend to establish these industry relationships with
terms  that  are  standard  in  the  oil  and  gas  industry.

CURRENT  PROJECTS  AND  CAPITAL  REQUIREMENTS

CORE PROPERTIES
---------------

BARNETT  SHALE  PROJECT  -

The  Barnett  Shale  Project  is located in the Fort Worth basin of Texas and is
arguably  one  of  the most exciting plays to emerge in the lower 48 in the past
decade.  Our position consists of a substantial leasehold position inside a five
county Area of Mutual Interest with Exxon Mobil Corporation and Harding Company,
a  privately  held  Fort  Worth based oil and gas company. Initial production is
estimated  to  commence in early 2007. An active drilling and leasing program is
planned  for  2007  and  2008  and  beyond.

On  August  29,  2006,  we  entered  into  a Second Amended and Restated Program
Agreement  with  Harding  (the  "Second  Amendment")  under  which we received a
fixed  14%  working  interest in the existing Project leases.  The assignment by
Harding to us shall be subject only to applicable royalty and overriding royalty
burdens  described  in  the  Amended Program Agreement. The interest we acquired
relative to the Second Amendment is an un-promoted interest which eliminates our
previous  obligations  to  advance  a  significant  amount of costs on behalf of
Harding.  Our  cost  bearing  interest  in  all  future  acquisition,  drilling,
completion  and  operating  costs  shall  also remain  fixed  at  an un-promoted
14%.  Pursuant  to  the  terms  of  the Second Amendment, in October we paid our
accrued  drilling  and operating obligations for the months of May and June 2006
in  the amount of $875,605 and have committed to pay $1,635,725 related to lease
acquisition  costs for May and June paid for by ExxonMobil and lease-banked.  We
anticipate  the  $1,635,725  to  be  due  in  December  2006.

We continue to work directly with Exxon Mobil Corporation and Harding Company to
form  the  integrated  venture  for  the project for both upstream and gathering
system  assets  under the previously announced non-binding "Heads of Agreement".
Subsequent to the third quarter of 2006 we assigned our interests in the Barnett
Shale  leases  to a wholly owned subsidiary, Barnett Petrosearch, LLC which will
hold  our  interest  in  the  integrated  venture  when  and  if  it  is formed.

NORTH TEXAS/PANHANDLE WATER FLOOD PROJECT - In November 2005, we acquired a 100%
working  interest in 1,755 acres in the Quinduno Field in Roberts County, Texas,
in  the  Anadarko  Basin.  The  project  is  focused  on infill drilling and the
implementation  of  a  water  flood  on  the  property.  Quinduno  has  a  large
established  resource  base  of  original  oil in place.  Since its discovery in
1953,  only  five  million  barrels have been produced using primary production.

One  infill  well  has been drilled to date. We have an ongoing program to enter
each  of  the 20 wells that have not been plugged. So far, we have entered seven
of  these  older  wells  to  determine  their  mechanical  status  and establish
potential  productivity.  Two  of  these  wells  have  been equipped and are now
producing. We have prepared a detailed study and development plan for the field.
Our  independent  engineers,  Ryder  Scott,  have  estimated  proved  reserves
extractable  by  water  flood at 2.1 million barrels, with probable and possible
reserves  adding  a  further 6.7 million barrels. Slightly deeper than the water
flood  zone,  the  Moore  County  Limestone  formation has undrilled exploration
potential  that  may  be  tested


<PAGE>
in a future well. We are in final stages of negotiation with an industry partner
to  jointly  develop  this  important  asset.

SW  GARWOOD,  COLORADO  COUNTY,  TEXAS -  The Wilcox Trend Garwood field has had
three  wells drilled with one of these in the process of being completed.  Seven
additional  proved, probable and possible locations are on current leases.   The
initial  well on this prospect, the Pintail #1, completed in the Upper Wilcox in
December  2004,  paid  out  in  April  of  this  year.  As  of  payout, we began
participating  in  the production from the well with a 16% working interest. The
well  is  currently producing approximately 260 Mcfd and 3 bopd.We have recently
proposed  additional  perforations  and  installed  a gas compressor to increase
production.

The  second well, the Pintail Flats #1, was completed and fracture stimulated in
May,  2005  from  15,950  feet  to  16,010  feet in the Lower Wilcox. Completion
problems  resulting  from  the  fracture  treatment  resulted  in  the  well
under-performing  (at about 210 Mcfd) compared to expectations from the zone. We
have recompleted and fracture stimulated an uphole zone at 15,100 feet. The well
flowed  back  frac  fluids  with a 2000 Mcfpd gas rate into the sales line as of
August  3,  2006.  The  well  is currently flowing 750 Mcfd and we are analyzing
potential  additional  perforations.  We have a 16% working interest in the well
after  payout.  The  well  has  2 additional potentially productive zones in the
Lower  Wilcox and 3 additional potentially productive zones in the Upper Wilcox.

A  third  well,  the Kallina 46 #1, reached its targeted depth of 16,230 feet on
August  6,  2006.  Data  available  while drilling indicates several potentially
productive  Wilcox  sands  from  10,400  feet  to 16,100 feet. Gross prospective
interval is believed to exceed 250 feet of pay. As discussed in our Footnote #3,
we  now  have a 87.5% before payout (75.5% after payout) working interest in the
Kallina  46  #1 and the associated 438 acre lease. Completion operations on this
well  commenced  on November 6, 2006. Production from the well is expected prior
to  year  end.

We  believe  these  wells are in an excellent location in the trend. Significant
discoveries  by  others are nearby in the same sand sequences. These discoveries
are  now being exploited by Petrohawk Energy Corp. and Cabot Oil & Gas less than
one  half  mile  west  of our westerly lease line.  The initial reported test of
Petrohawk's  Garrett  #1  is  11,235  MMcfd  after  stimulation.

GRUMAN  PROSPECT, STARK COUNTY, NORTH DAKOTA - On March 28, 2006, we spudded the
Gruman  18-3  well  intended  to  be either an increased density well or a water
injection  well up dip of the Gruman 18-1. The well reached total depth of 9,890
feet  on  April  14,  2006,  and will be completed as an injection well. We have
established  that  the  Gruman 18-3 is in pressure communication with the Gruman
18-1.  Further  testing  or  stimulation may be necessary to achieve the desired
future  injection  rates.

In October 2006, we undertook certain remedial work on the Gruman 18-1 which has
improved  the  production  on  the well. We are currently assessing the positive
impact  on  the  long  term  production.

Once  we  receive  permit  approval  for  water  injection  on this property and
pressure  maintenance  is initiated, we expect further production increases. The
initial  response  from  the  water  being injected into the well is expected to
begin  within  60 to 90 days from the start of injection. We have applied to the
North Dakota Industrial Commission for a water flood unit and expect approval by
year  end.

Proved  developed  reserves  in  the  prospect  to  our  share of the well as of
December  31,  2005,  were 309 Mbo and 82 MMcf of natural gas, as estimated by a
third  party  engineering  firm,  McCartney  Engineering,  LLC.

EXPLORATION PROJECTS
--------------------

AIRPORT  PROSPECT,  WOODWARD  COUNTY  -  We farmed out this 640-acre prospect in
November 2005 and retained a 10% working interest. The initial well, the Corbett
N  13  #1 was spudded on March 7, 2006, and reached total depth of 8,323 feet in
the  Morrow Sands on March 27, 2006. Three sands were perforated and tested gas.
This  well  was  completed in June 2006 at an initial test rate of approximately
500  Mcfd.  Initial sales were delayed while awaiting pipeline construction. The
well  began  commercial production on October 19, 2006 at an initial rate of 585
Mcfd.


<PAGE>
RODNEY  ISLAND,  TENSAS  PARISH,  LOUISIANA  -  In  October  2005,  we took over
operations  of  the  Harper  Z-1  well  on  the  Rodney Island prospect from the
previous operator after casing was set and cemented. As the current operator and
with the agreement of the other working interest owners, we initiated litigation
in February 2006 against the previous operator for non-payment of their share of
drilling and completion costs. Settlement discussions to resolve the dispute are
in  progress.

Downhole  mechanical  difficulties  hindered  our  attempt to complete the well,
which  was  directionally  drilled  to a measured depth of 11,701 feet (vertical
depth  =  9,373  feet)  and  logged  approximately  19  feet  of oil sand in the
Tuscaloosa  Massive  Sand.  Our  program  for  sidetracking  the well to improve
wellbore  conditions  has  been  finalized.  Timing of the project completion is
indeterminate  due  to  the  ongoing  litigation.

Ryder  Scott  estimates proved reserves net to our share as of December 31, 2005
to  be 49.4 Mbo and 26 MMcf. We have a 25% working interest before payout in the
Harper  Z-1  well  and  18.75% working interest after payout.  We have an 18.75%
working  interest  in  all  additional  wells.

BURLESON COUNTY, TEXAS, PROJECTS - This is a multi-well natural gas project that
includes  a  total  of 15 development and step-out locations in the Austin Chalk
and  Georgetown  formations  at  approximately  10,000  feet vertical depth on a
targeted  leasehold position of approximately 11,000 acres, with 7,361 net acres
having  been  leased. Horizontal wells are planned with total measured length of
approximately  13,000  feet.  The  initial  well is planned to be spudded in the
fourth  quarter of 2006 with a second well planned in the first quarter of 2007.
We  have  a 37.5% non-operated working interest in the project, however; we have
agreed  to  sell  our interest in the leases to the operator in exchange for the
reimbursement  of  100%  of  our  investment.

MISSISSIPPI  TUSCALOOSA  PROJECTS  --  We  have  identified  five Tuscaloosa oil
prospects  in  the  Mississippi Inland Salt Basin, in Yazoo County, comprising a
maximum  of  2,295  acres  and  up  to  18  potential drilling locations.  Eight
locations  are  planned  to be drilled in 2007, ranging from 6,150 feet to 7,500
feet  in  depth.  Approximately  55%  of  the  required acreage has been leased.
Seismic  data  on  the prospects has been reprocessed and confirmed our original
geological  analysis. We own 100% of the prospects and will operate the project.
We  are  in  initial discussions with a potential industry partner to co-develop
these  prospects.

TAIT  PROJECTS  -  COLORADO  COUNTY,  TEXAS  -  The initial well on this natural
prospect,  the  Sealy  #1, was spudded April 25, 2006 and reached total depth in
the  Upper  Wilcox in May 2006. We determined all potential hydrocarbon zones in
the  well  bore to be non-commercial and did not consent to a completion attempt
by  the  operator in the shallower Frio sands. However, data from this well bore
did  provide  support  for  the geological interpretation of the shallower Yegua
sands  between  2500 feet and 3100 feet in which we have 2 identified locations.
The  first  of  these  is scheduled to be drilled at the end of this year or the
beginning  of  2007,  pending equipment availability. We have a 10% non-operated
working  interest  in  leases  totaling  1,250  acres  in  this  project.

RESULTS  OF  OPERATIONS

The  following discussion and analysis of our financial condition and results of
operations  should  be  read  in  conjunction  with the financial statements and
accompanying  notes  and  the other financial information appearing elsewhere in
this  filing.


<PAGE>
The  factors  that  most significantly affect our results of operations are: (i)
the  sale  prices  of  crude  oil and natural gas; (ii) the amount of production
sales; and (iii) the amount of lease operating expenses. Sales of production and
level  of  borrowings  are  significantly impacted by our ability to maintain or
increase  production  and  reserves from existing oil and gas properties through
exploration  and  development  activities.

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2006 COMPARED TO THE THREE MONTHS ENDED
SEPTEMBER  30,  2005

REVENUES

Consolidated  oil and gas production revenue for the quarter ended September 30,
2006 was $335,711 versus $240,005 for the quarter ended September 30, 2005. This
increase is due to the increase in production from our SW Garwood, Pintail Flats
#1  well  which  reached  payout  in  the  second  quarter  of  2006, as well as
significantly  higher  oil  prices  in  2006  as  opposed  to  2005.

In October 2006, we undertook certain remedial work on the Gruman 18-1 which has
improved  the  production  on  the well. We are currently assessing the positive
impact  on  the  long  term  production.

LEASE  OPERATING  AND  PRODUCTION  TAX  EXPENSE

Lease  operating and production tax expense for the quarters ended September 30,
2006  and  2005 were $240,977 and $140,030, respectively.  These expenses relate
to  the  costs  that  are incurred to operate and maintain our wells and related
production  equipment,  including the costs applicable to the operating costs of
support  equipment  and  facilities.  Fluctuation  relates  to 1) an increase in
production  from 2005 to 2006, 2) the lease operating expenses increased because
in  November  2005  we added approximately 30 existing wells associated with our
Quinduno  Field  Prospect,  Roberts  County,  Texas that require lease operating
costs  to  be  incurred  even  though  the wells have minimal production.  These
existing,  but  non-productive  wells are vital to the success of the waterflood
project  that  will  be  needed  to  realize the reserves in the Quinduno Field.

DEPLETION,  DEPRECIATION  AND  AMORTIZATION

Costs  for  depletion,  depreciation  and  amortization  for  the quarters ended
September  30,  2006,  and  2005,  were  $79,614 and $54,738 respectively.  This
increase  is  attributable  to  1)  an increase in proved reserves in the second
quarter  of  2006, mainly due to the addition of our North Texas/Panhandle Water
Flood Project (described herein) compared with the third quarter of 2005; and 2)
an increase in the property costs subject to amortization from the quarter ended
September  30,  2006  versus  the  quarter  ended  September  30,  2005.

GENERAL  AND  ADMINISTRATIVE  EXPENSES

General  and  administrative  expenses for the quarters ended September 30, 2006
and 2005, were $550,075 and $784,005, respectively.  This variance can primarily
be  attributed  to  a decline in the number of employees which resulted in lower
payroll expense in the third quarter of 2006 as compared to the third quarter of
2005.  The decrease can also be contributed to a decrease in management fees and
fees  paid  to  third  party  technical  consultants.

NET  LOSS/INCOME  FROM  OPERATIONS

We  generated a net operating loss of $(534,955) for the quarter ended September
30,  2006,  compared  to  net operating loss of $(738,768) for the quarter ended
September  30,  2005.  The  $(203,813)  variance  is  primarily due to increased
revenues  and lower general and administrative expenses for the third quarter of
2006  versus  the  third  quarter  of  2005.


<PAGE>
OTHER  INCOME  (EXPENSE)

The increase in interest expense from $42,333 in the quarter ended September 30,
2005  compared  to  $137,034  in  the  quarter  ended  September  30,  2006  is
attributable to a higher debt lever in 2006 and an increase in the interest rate
when  the  financing  arrangement  was  amended  in  the fourth quarter of 2005.

FOR  THE  NINE  MONTHS ENDED SEPTEMBER 30, 2006 COMPARED TO THE SIX MONTHS ENDED
SEPTEMBER  30,  2005

REVENUES

Consolidated  oil and gas production revenue for the nine months ended September
30,  2006 was $827,311 versus $1,617,520 for the nine months ended September 30,
2005.  This  decrease  is  primarily  the result of sale of our Blue Ridge Field
property in Fort Bend County, Texas, effective July 1, 2005, which accounted for
$552,998 of revenue during the nine months ended 2005, and lower production from
our North Dakota well in the nine months ended September 30, 2006 as compared to
the  same  period in 2005. Our North Dakota well was not producing from October,
2005  until  March,  2006 as a result of the pump being down. In April, 2006, we
drilled  a  9,900  foot  well  into the base of the productive reef of our North
Dakota  prospect  for  the purpose of re-pressuring the reservoir and increasing
the  production  of  the  well. We are in the process of obtaining the necessary
permits  to  begin  the  water  injection process which will begin in the fourth
quarter of 2006, or early 2007. Further testing or stimulation will be performed
as  deemed  necessary  to  achieve  the  desired  future  injection  rates.

LEASE  OPERATING  AND  PRODUCTION  TAX  EXPENSE

Lease  operating  and production tax expense for the nine months ended September
30,  2006  and  2005  were  $658,859 and $467,091, respectively.  These expenses
relate  to  the  costs  that  are incurred to operate and maintain our wells and
related  production  equipment,  including the costs applicable to the operating
costs  of  support  equipment  and facilities.  Although there was a significant
decrease in production from 2005 to 2006, the lease operating expenses increased
because  in  November  2005  we added approximately 30 existing wells associated
with  our  Quinduno  Field  Prospect,  Roberts  County, Texas that require lease
operating  costs  to  be incurred even though the wells have minimal production.
These  existing,  but  non-productive  wells  are  vital  to  the success of the
waterflood  project  that will be needed to realize the reserves in the Quinduno
Field.

DEPLETION,  DEPRECIATION  AND  AMORTIZATION

Costs  for  depletion,  depreciation  and amortization for the nine months ended
September  30,  2006,  and 2005, were $214,242 and $540,684, respectively.  This
decrease  is  attributable  to  lower  production  in  2006  and the significant
increase in proved reserves in 2006 compared with the first nine months of 2005.
Production in the first nine months of 2005 was 34,639 boe as compared to 12,157
boe  in  the first nine months of 2006.  The decrease caused by lower production
and  higher  reserves  was partially offset by an increase in the property costs
subject  to  amortization.  Given  the  fact  that  depletion  is  calculated by
multiplying  the  net  amortizable  costs  times  the units of production in the
related  period  relative to the total proved reserves, the depletion amount for
the first nine months of 2006 was significantly lower than the depletion for the
same  period  in  2005.

GENERAL  AND  ADMINISTRATIVE  EXPENSES

General and administrative expenses for the nine months ended September 30, 2006
and  2005,  were  $1,845,396  and  $2,159,950,respectively.  This  variance  can
primarily  be  attributed to a decline in the number of employees which resulted
in lower payroll expense in the nine months ended September 30, 2006 as compared
to  the same period in 2005.  The decrease can also be contributed to a decrease
in  management  fees and fees paid to third party technical consultants in 2005.


<PAGE>
NET  LOSS/INCOME  FROM  OPERATIONS

We  generated  a  net  operating  loss of $(1,891,186) for the nine months ended
September  30,  2006,  compared  to a net operating loss of $(1,550,205) for the
nine months ended September 30, 2005.  The $(340,981) variance relates mainly to
the  fact  that  revenues  decreased a total of $790,209 from the same period in
2005  to  2006 offset by a decrease in total costs and expenses of $449,228 from
2005  to  the  same  period  in  2006.

OTHER  INCOME  (EXPENSE)

The  increase  in  interest  expense  from  $154,286  in  the  nine months ended
September  30,  2005 compared to $340,912 in the nine months ended September 30,
2006  is  attributable  to  a  higher  debt level in 2006 and an increase in the
interest  rate  when the financing arrangement was amended in the fourth quarter
of  2005.

The  $1,000,000 of other income during the nine months ended September 30, 2006,
is  the result of the sale of common stock held in a company that had a basis of
zero.

OFF-BALANCE  SHEET  ARRANGEMENTS

We  had  no  off-balance  sheet  arrangements  during  the  fiscal quarter ended
September  30,  2006.

ITEM  3.     CONTROLS  AND  PROCEDURES

     Richard  D.  Dole,  our  Chief  Executive  Officer,  and  David J. Collins,
     our  Chief  Financial  Officer, have concluded that our disclosure controls
     and  procedures  are  appropriate  and effective. They have evaluated these
     controls  and  procedures  as  of  September  30,  2006. There have been no
     changes  in  our internal controls over financial reporting during the last
     fiscal  quarter  that have materially affected, or are reasonably likely to
     materially  affect,  our  internal  control  over  financial  reporting.


PART  II--OTHER  INFORMATION

ITEM  2.     UNREGISTERED  SALES  OF  EQUITY  SECURITIES  AND  USE  OF  PROCEEDS

     During  the  quarter  ended  September  30,  2006,  we  completed  the
     following  transactions in reliance upon exemptions from registration under
     the  Securities  Act of 1933, as amended (the "Act") as provided in Section
     4(2) thereof. All certificates issued in connection with these transactions
     were  endorsed  with  a  restrictive  legend confirming that the securities
     could  not  be  resold  without registration under the Act or an applicable
     exemption  from  the  registration requirements of the Act. We believe that
     each  person  was  a "qualified" investor within the meaning of the Act and
     had  knowledge  and  experience  in  financial  and business matters, which
     allowed  them  to  evaluate  the  merits  and risks of our securities. Each
     person  was  knowledgeable  about  our  operations and financial condition.

     We  committed to issue 32,500 shares of common stock to Piedmont Consulting
     for  investor  relation  services.


<PAGE>
ITEM 6.     EXHIBITS

-----------------------------------------------------------------------
EXHIBIT NUMBER                  DESCRIPTION OF EXHIBIT
--------------  -------------------------------------------------------
-----------------------------------------------------------------------
     31.1       Rule 13a-14(a) Certification of Chief Executive Officer
-----------------------------------------------------------------------
     31.2       Rule 13a-14(a) Certification of Chief Financial Officer
-----------------------------------------------------------------------
     32.1       Section 1350 Certification of Chief Executive Officer
-----------------------------------------------------------------------
     32.2       Section 1350 Certification of Chief Financial Officer
-----------------------------------------------------------------------


<PAGE>
SIGNATURES

In  accordance with the requirements of the Securities and Exchange Act of 1934,
the  Registrant  has  duly  caused this report to be signed on its behalf by the
undersigned,  thereunto  duly  authorized.

PETROSEARCH ENERGY CORPORATION

Date:   NOVEMBER 14, 2006



By:     /s/ Richard Dole
        ---------------
        RICHARD DOLE
        CHIEF EXECUTIVE OFFICER, PRESIDENT AND CHAIRMAN