**U.S.
      SECURITIES AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**





**FORM
      10-KSB**


**(Mark
      One)**





x
            **ANNUAL
                REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
                1934
                FOR THE FISCAL YEAR ENDED****APRIL
                30, 2006****.**o
            **TRANSITION
                REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
                ACT OF
                1934 FOR THE TRANSITION PERIOD OF _________ TO
                _________.**







**Commission
      File Number:** **0-27659**





**CANWEST
      PETROLEUM CORPORATION**


**(Name
      of small business issuer in its charter)**





**Colorado**
            
            
            **98-0461154**State
                or other jurisdiction of
            
            
            (I.R.S.
                Employerincorporation
                or organization
            
            
            Identification
                No.)




**Suite
                1005, 550 - 11thAvenue S.W., Calgary, Alberta CANADA T2R 1M7**(Address
                of principal executive offices,
                including zip code)




Issuer's
      telephone number: **(403)
      263-1623**


Securities
      registered under Section 12(b) of the Act: None





**** Securities registered under Section 12(g) of the Act:





**Common
      Stock, $.001 Par Value**


(Title
      of
      Class)





Check
      whether the Issuer (1) 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





Check
      here if there is no disclosure of delinquent filers in response to Item 405
      of
      Regulation S-B contained in this form, and no disclosure will be contained,
      to
      the best of registrant's knowledge, in definitive proxy or information
      statements incorporated by reference in Part III of this Form 10-KSB or any
      amendment to this Form 10-KSB.





Yes
o   No
x





Issuer's
      revenues for its most recent fiscal year: $0.





As
      of
      July 18, 2006, there were 122,218,808 shares of the Registrant's $.001 par
      value
      Common Stock ("Common Stock"), Registrant's only outstanding class of voting
      securities, outstanding. The aggregate market value of Common Stock held by
      non-affiliates of the Registrant, computed by reference to the closing bid
      price
      on July 18, 2006, is **** $3.73. ****





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act). YES o NO x





Transitional
      Small Business Disclosure Format (check one):  Yes
o   No
x













This
      document contains technical and geological terms, which are defined in the
      Glossary of Common Terms, which appears at the end of Part I of this Report.
      All
      future payments in Canadian dollars have been converted to United States dollars
      using an exchange rate of $1.00 U.S. = $1.1175, which was the April 30, 2006
      exchange rate. Unless otherwise specified, all dollar amounts are expressed
      in
      United States dollars.




**PART
      I**




When
      we
      use the terms "CanWest Petroleum Corporation," the "Company," "we," "us," "our,"
      "CanWest" or "CWPC," we are referring to CanWest Petroleum Corporation and
      its
      subsidiaries, unless the context otherwise requires. We have included technical
      terms important to an understanding of our business under "Glossary of Common
      Terms" at the end of this section. Throughout this document we make statements
      that are classified as "forward-looking." Please refer to the "Cautionary
      Statement about Forward-Looking Statements" section of this document for an
      explanation of these types of assertions.





**Item
      1.**  **DESCRIPTION
      OF BUSINESS**





**Background
      and Corporate Structure**





We
      are a
      Colorado corporation formed on April 3, 1998 as Uranium Power Corporation.
      On
      November 2, 2004 we changed our name to CanWest Petroleum Corporation. During
      the financial year ended April 30, 2006 our head office was located in
      Vancouver, British Columbia. In May 2006, we relocated our head office to Suite
      1005, 550 - 11 th Avenue
      S.W., Calgary, Alberta, Canada T2R 1M7. Effective July 24, 2006 the Company's
      principal office will be at 205, 707-7 th Avenue
      S.W., Calgary, Alberta, Canada T2P 3H6.




The
      Company operates through three subsidiary corporations and conducts limited
      joint venture activities directly. Our primary operating subsidiary is Oilsands
      Quest Inc. ("OQI") (formerly 808099 Alberta Ltd.), an Alberta corporation.
      We
      own approximately 64% of the issued and outstanding voting common shares of
      OQI.
      OQI was established as the operating subsidiary of the Company to explore for
      and develop oil sands deposits in the Province of Saskatchewan and is currently
      conducting Saskatchewan's first major oil sands exploration
      program.




In
      addition to OQI, we also have the following operating subsidiaries:




·
            We
                own 100% of Township Petroleum Corporation, an Alberta corporation
                ("Township"). Township owns an oil sands lease in the Province of
                Alberta
                acquired in 2005 (the "Eagles Nest Prospect") and is currently developing
                plans for exploring the oil sands potential on the
                lease.




·
            We
                own 100% of Western Petrochemicals Corp. ("WPC"), an Alberta corporation.
                WPC owns certain rights relating to exploration for oil shale, referred
                to
                as the Pasquia Hills Oil Shale
                Prospect.




**General
      Development of the Business**




Initially
      our primary business activity was in the exploration for uranium and petroleum
      in Canada. However, during the year ended April 30, 2003 we wrote off our
      investments in the uranium resource properties as we had no further plans to
      develop them. We then began to actively seek new business opportunities in
      the
      oil and gas sectors.




2


Over
      the
      past three years, the Company has focused primarily on business opportunities
      in
      the oil and gas sector, and in particular the oil sands and oil shale sectors
      in
      western Canada. We are currently focused on the exploration, delineation and
      ultimate exploitation of bitumen through the activities being conducted by
      OQI,
      as described below under "Oilsands Quest Inc."




In
      addition, we have certain other business opportunities that may be developed
      but
      which are not, when compared to OQI, as significant to the Company at this
      time,
      as described below under "The Company's Other Business Opportunities".




Oilsands
      Quest Inc.  *(formerly
      known as the Firebag East oil sands prospect)*




On
      September 24, 2004, we acquired all of the issued and outstanding shares of
      808099 Alberta Ltd., which was previously inactive, and on November 3, 2004
      this
      company changed its name to Oilsands Quest Inc. As of July 18, 2006 we own
      a 60.7% interest, on a fully diluted basis, and a 64% interest calculated only
      on the issued and outstanding shares of OQI. On June 9, 2006, we entered into
      a
      reorganization agreement (the "Reorganization Agreement") with OQI whereby
      we
      agreed to acquire all of the fully diluted common shares of OQI not currently
      owned by us. Under the terms of the Reorganization Agreement and subject to
      the
      approval of OQI shareholders, each common share of OQI not already owned by
      us
      will be exchanged for 7.95 exchangeable shares of OQI, subject to adjustments
      (the "Exchangeable Shares"). The rights, privileges and restrictions governing
      the Exchangeable Shares will provide that each whole Exchangeable Share may
      be
      exchanged at the holder's option for one share of our Common Stock. Pursuant
      to
      the terms of the Exchangeable Shares and based on the number of OQI's fully
      diluted shares currently outstanding, CanWest may be required to issue
      approximately 74 million of its shares of Common Stock for all of the OQI shares
      not controlled by CanWest. Until exchanged, each Exchangeable Share will provide
      a holder with economic terms and voting rights which are, as nearly as
      practicable, effectively equivalent to those of a share of our Common Stock.
      The
      transaction is expected to be completed on August 14, 2006 and is subject to
      certain conditions precedent, including the approval of two-thirds of the OQI
      minority shareholders. Following completion of the transaction, we will own
      100%
      of the voting equity shares of OQI. OQI's principal office is located at Suite
      1005, 550 - 11 th Avenue
      S.W., Calgary, Alberta, Canada T2R 1M7. Effective
      July 24, 2006, OQI's principal office will be at 205, 707-7 th Avenue
      S.W., Calgary, Alberta, Canada T2P 3H6.




OQI's
      business plan is to focus on the exploration, delineation and ultimate
      exploitation of bitumen resources on its exploration permits located in the
      Province of Saskatchewan.




*Exploration
      Permits*




On
      September 29, 2004, we acquired a 49% interest through OQI in certain Oil Shale
      Exploration Permits (the "Exploration Permits") that covered approximately
      2,000
      square miles (1,400,000 acres) in northwestern Saskatchewan along the Alberta
      border. The 49% interest in the Exploration Permits was acquired for $769,125,
      plus 50,000 of our Common Stock and a 2.5% gross overriding royalty. In order
      to
      finance the purchase of the 49% interest, OQI borrowed funds from the Company
      in
      the form of a convertible debenture. On November 18, 2005, the principal and
      accrued interest on the debenture was converted into 788,769 common shares
      of
      OQI.




We
      entered into an agreement dated November 8, 2004, as amended (the "WCM
      Agreement"), to acquire all of the shares of Western Canadian Mint Inc. ("WCM"),
      a company that owned all of the shares of American Oilsands Company Inc.
      ("AOC"), which owned the remaining 51% working interest in the Exploration
      Permits, subject to a $0.11 per recoverable barrel royalty held by various
      arm's
      length parties subject to a buy down. Prior to completing this acquisition,
      we
      assigned all of our rights and obligations to OQI pursuant to a letter agreement
      dated November 12, 2004 and an assignment dated April 27, 2005. As a result,
      on
      May 3, 2005, pursuant to the terms of the WCM Agreement, OQI acquired all of
      the
      outstanding shares of WCM. The combined consideration paid by us and OQI was
      $1,202,131, and two million shares of our Common Stock and the assumption of
      $0.11 per recoverable barrel royalty held by various arm's length parties.
      WCM
      was then merged with OQI.




3


As
      a
      result of these transactions, OQI holds an undivided 100% interest, subject
      to
      the above noted royalties, in Saskatchewan Oil Shale Exploration Permits nos.
      PS00205, PS00206, PS00207, PS00208, PS00209, PS00210, PS00211, PS00212, PS00213,
      PS00214, PS00215, PS00216, and PS00217, granted on June 1, 2004 under the
      provisions of the Oil Shale Regulations, 1964, as amended, from time to time
      by
      the Province of Saskatchewan ("Permit Lands").




The
      Exploration Permits provide for the right to explore, mine, quarry and work
      the
      Permit Lands for a term of five years to May 31, 2009 unless extended or until
      a
      lease has been granted for their development. In accordance with the terms
      of
      Exploration Permits, on May 31, 2005, OQI relinquished 40% of the total acreage
      covered by the permits. OQI was required to relinquish another 40% of the
      remaining acreage by May 31, 2006. OQI requested an extension of the May 31,
      2006 relinquishment from the Province of Saskatchewan. OQI will undertake this
      relinquishment once a decision is made by the Province of Saskatchewan. On
      July18, 2006, the Permit Lands comprised an area of approximately 846,690 acres,
      subject to relinquishment of an additional 338,676 acres in the future.
      Following all relinquishments to the Province of Saskatchewan, the Permit Lands
      will comprise an area of approximately 508,000 acres.




The
      Exploration Permits are subject to rental payments and certain levels of
      expenditure annually on the applicable lands pursuant to government regulations.
      The annual rent payments are payable in advance and were $0.018 ($0.02 CDN)
      per
      acre for the current year escalating to $0.089 ($0.10 CDN) per acre in the
      fifth
      year. The required exploration expenditures to hold the Exploration Permits
      for
      the current year were $0.036 ($0.04 CDN) per acre escalating annually to $0.089
      ($0.10 CDN) per acre in the fifth year. OQI is in compliance with the annual
      rental and current expenditure requirements.




*Gross
      Overriding Royalties on OQI Permit Lands*




As
      part
      of the acquisition of the Permit Lands, OQI assumed a 2.5% gross overriding
      royalty ("GORR") to Stripper Energy Services Inc. ("Stripper Energy") and $0.11
      per barrel royalties on petroleum products recovered from the Permit Lands,
      held
      by various parties. The 2.5% GORR is to be calculated on the current market
      value of the petroleum substances (including bitumen) produced, saved or
      marketed from the Permit Lands. On June 6, 2006, our wholly-owned subsidiary,
      Township entered into a Share Purchase Agreement and related Escrow Agreement
      (the "Agreements") with the shareholders of Stripper Energy. The Agreements
      were
      effective as of May 31, 2006 and effectively provide Township with the option
      to
      purchase the shares of Stripper Energy for $16,778,523 ($18,750,000 CDN)
      (subject to adjustment in certain circumstances) at any time up to August 15,
      2006. Township made a non-refundable payment of $1,130,927 ($1,250,000 CDN)
      to
      secure this option.




*The
      Oil Sands Industry*




According
      to the National Energy Board of Canada (the "NEB") oil sands contain sand,
      clay,
      water and bitumen, a heavy, tar like, viscous form of crude oil, with a density
      of approximately 8 degrees to 14 degrees API. Bitumen-bearing geologic
      formations, typically containing up to 18 percent bitumen saturation by weight,
      can be situated near the surface or hundreds of feet below. As stated in a
      paper
      prepared by the Petroleum Communication Foundation (the "PCF"), recovery of
      oil
      sands from formations above 75 meters (250 feet) is by open-pit mining; for
      deeper formations, in-situ recovery techniques such as steam-assisted gravity
      drainage ("SAGD") are used. Development in the oil sands industry in Canada
      to
      date has been focused primarily in Alberta.





4


The
      Alberta Energy Utilities Board (the "AEUB") estimates there are 1.6 trillion
      barrels of bitumen resource in place in Alberta of which 315 billion barrels
      are
      thought to be recoverable. The NEB has stated that initial established reserves
      (some 178 billion barrels) are considered sufficient to meet 250 years of
      Canadian crude oil demand at current rates. According to the 2006 Canadian
      Energy Survey prepared by PricewaterhouseCoopers ("PWC") there are three main
      deposits of oil sands in Alberta: Athabasca, which represents approximately
      80
      percent, Cold Lake which represents approximately 12 percent and Peace River
      which represents approximately 8 percent. The AEUB has estimated that together,
      they occupy an area of about 140,000 square kilometers (54,000 square
      miles).





North
      America's energy needs are increasingly being met by bitumen produced from
      mining and in-situ operations in Alberta's oil sands. According to the Canadian
      Association of Petroleum Producers in 2005, Canada's crude oil and equivalent
      production totaled about 2.5 million barrels/day; more than two-thirds of this,
      1.7 million barrels/day, came from Alberta, which included about one million
      barrels/day from the oil sands. In their survey PWC stated production from
      the
      oil sands is expected to more than double by 2010 and, by 2015, to increase
      to
      3.0 million barrels/day. Total crude oil production is estimated to grow to
      4.6
      million barrels/day in 2015 and then to 4.9 million barrels/day by 2020.
      According to the Province of Saskatchewan, Saskatchewan is Canada's second
      largest oil producer (after Alberta) and produces about 17% of Canada's total
      oil production.





Exploration
      for commercially viable oil sands deposits has traditionally focused on Alberta,
      resulting in the establishment of mining and in-situ projects in the Athabasca
      oil sands region and in-situ projects in Cold Lake and Peace River deposits.
      Production from the world's first commercial oil sands mine came on stream
      in
      1967. The second mining operation came on stream in 1973; commercial
      in-situ ** projects
      also began contributing production from deeper oil sands deposits in the 1970s.
      As stated by PWC in their survey at the beginning of 2006, there were three
      mining projects and 12 in-situ projects operating in the oil sands in Alberta
      and more than 60 projects in various stages of planning. The lead time for
      production from an oil sands project is generally a minimum of seven to ten
      years from initial exploration.





*Resource
      Potential Report*




In
      October 2004, OQI engaged Dr. Michael Ranger, PhD, to conduct an assessment
      of
      the bitumen potential of the Permit Lands based upon available historical
      drilling data. Dr. Ranger is an independent geological consultant specializing
      exclusively in the oil sands industry. Dr. Ranger concluded that the
      bitumen-bearing east-west valley trends observed in northeast Alberta's
      Athabasca oil sands (e.g. Suncor's Firebag project and others) are assumed
      to
      extend onto the Permit Lands. The Ranger Report recommended that exploration
      work consisting primarily of core well stratigraphic testing be undertaken,
      initially on the western half of the Permit Lands.




*Activities
      to Date*




In
      January 2005, OQI submitted an application to the Saskatchewan government for
      its Phase I exploration program of up to 25 core holes. In October 2005, OQI
      received regulatory approval for the Phase I program after the completion of
      various on-site, environmental and access assessments. Building of site
      infrastructure, including road access and portable camp housing installation
      began in November 2005 and the exploration drilling began in December 2005.
      In
      January 2006, OQI's first hole intersected bitumen-bearing McMurray formation.
      The Phase I exploration drilling ended in April 2006 with interim results to
      date indicating 19 of 24 holes having intersected the bitumen bearing McMurray
      formation, representing an 80 percent success rate. We have incurred
      approximately $8.0 million (CDN) to April 30, 2006 related to this exploration
      effort.




5


In
      interim drilling results announced on June 14, 2006, we noted that eight wells
      drilled in the best three-section block had an average pay zone of 19 metres
      (62
      feet), with one hole having more than 28 metres (91 feet) of pay. Grades of
      bitumen saturation by weight for those eight wells were up to 18 percent.




*Outlook*




OQI's
      current budget for its upcoming explorations programs is $40 million (CDN).
      The
      company is now preparing for its summer exploration program. Subject to
      regulatory approval, this program will include geophysical evaluation programs
      and drilling in the area of the west block discovery. Environmental and
      archaeological survey work will also be undertaken. OQI will conduct a second
      drilling program in winter 2006, which will consist of 150 holes. Regulatory
      approval has been received for this program, including the construction of
      80
      kilometers of new access roads (of which 36 kilometers have already been
      completed) to link the proposed drill sites. Up to an additional 100 holes
      may
      also be drilled in winter 2006 subject to regulatory approval and the requisite
      funding being available. In this area of Saskatchewan, the winter drilling
      season, which is dependent on weather conditions, is typically from November
      to
      April. Eight drilling rigs and the related infrastructure expenditures have
      been
      committed to the 2006 planned work.




OQI
      believes that it has sufficient funding to complete the upcoming summer and
      winter 2006 exploration programs. Additional funding will be required if the
      current exploration programs are increased in scope or changes are made to
      current plans or if the option to purchase the 2.5% GORR is exercised. Cash
      requirements over the next two years are expected to be in the $50 million
      to
      $100 million range and will be dependent on the results of the exploration
      drilling programs, success in obtaining further exploration permits and the
      ability to finance planned expenditures.




The
      Company's Other Business Opportunities




*Township
      Petroleum Corporation ("Eagles Nest Prospect")*




On
      August
      25, 2005 Township acquired Oil Sands Lease No.7405080355 (the "Eagles Nest
      Oil
      Sands Lease") located in northern Alberta for $727,187 in an Alberta Crown
      land
      sale. This prospect, known as the Eagles Nest Prospect, comprises an area of
      approximately 22,800 acres and is located in the Athabasca oil sands region
      in
      Alberta in Township 101, Range 13 West of the fourth Meridian. The lease
      provides for the right to drill for, win, work and recover and the right to
      remove bitumen resources from the lease for a term of 15 years, subject to
      the *Mines
      and Minerals Act* ,
      Alberta.




Prior
      to
      bidding on the Eagles Nest Prospect, on June 1, 2005 we entered into an
      agreement (the "Triple 7 Agreement") with three parties (collectively the
      "Triple 7 Joint Venture") to post, acquire, develop and produce oil sands
      deposits located in the Athabasca Region of Alberta, Canada. The Triple 7 Joint
      Venture provided the expertise necessary to identify, bid on, and acquire the
      Eagles Nest Prospect. Under the Triple 7 Agreement we issued the Triple 7 Joint
      Venture 114,015 shares of our Common Stock, with a deemed value of $127,432,
      in
      connection with acquiring the Eagles Nest Prospect and will pay $134,228
      ($150,000 CDN) in cash or Common Stock (at the discretion of the Company) on
      the
      first and second anniversary dates of the agreement. Stock issued under the
      agreement are subject to "piggyback" registration rights. On the third
      anniversary date of the Triple 7 Agreement we must pay a fee of $402,685
      ($450,000 CDN) if the Eagles Nest Prospect has not been surrendered, or if
      no
      commercial project has been identified. In the event that we receive a
      feasibility study, conducted by an independent third party, that indicates
      that
      a commercial project on one or more of the leases is economic and the Company
      plans to construct a commercial project, the Company is required to notify
      the
      Triple 7 Joint Venture. Upon commencement of construction of such a commercial
      project we must pay to the Triple 7 Joint Venture the sum of $5,369,128
      ($6,000,000 CDN). In addition to these payments we granted each of the Triple
      7
      Joint Venture partners a royalty in the Eagles Nest Prospect of $0.027 ($0.03
      CDN) on each barrel of crude bitumen produced, saved and sold from the Eagles
      Nest Prospect, or $382,295 ($450,000 CDN) per year, whichever is greater. In
      conjunction with the financing of the purchase of the permit, we granted
      additional royalties of $0.0058 (CDN) on each barrel of bitumen produced, saved
      and sold from the project.




6


Pursuant
      to the terms of the lease the Township's annual lease rental payments are
      $28,864 ($32,256 CDN).




Over
      the
      winter of 2005/2006, we undertook a detailed assessment of the historical data
      available on the Eagles Nest Prospect and we initiated planning an exploration
      strategy for the prospect area. The Company has incurred $159,020 in related
      costs during the fiscal year ended April 30, 2006. The Company's strategy for
      exploring the Eagles Nest Prospect is currently being evaluated by management
      and a detailed plan and exploration budget is expected to be developed by the
      winter of 2006.




*Western
      Petrochemicals Corporation ("Pasquia Hills Oil Shale Prospect")*




On
      April
      21, 2005 we acquired a 97.53% interest in Western Petrochemicals Corporation
      through the issuance of 10,728,124 of our Common Stock, and then increased
      our
      ownership in April 2006 to 100% by issuing 271,865 shares of our Common Stock
      to
      the remaining WPC shareholders. The issuance of these shares to WPC shareholders
      was the result of an agreement entered into in December 2003 to acquire all
      of
      the capital stock of WPC. At that time WPC's major stockholders committed their
      WPC shares to the acquisition.




WPC
      currently has a 100% interest in Saskatchewan Oil Shale Exploration Permits
      Nos.
      PS00185, PS00186, PS00197, and PS00198 (the "Pasquia Hills Oil Shale Permits"),
      granted under the provisions of the *Oil
      Shale Regulations* ,
      1964,
      as amended, from time to time by the Province of Saskatchewan ("Pasquia Hills
      Oil Shale Prospect"). The permits cover an area of approximately 337,775 acres
      and provide for the right to explore, mine, quarry and work the permit lands,
      but not to produce or recover oil shales (except for test purposes) until a
      lease has been granted. The WPC permits are scheduled to expire in 2006 unless
      extensions to the permits are granted or the permit lands are converted to
      leases. At this point in time we have not budgeted any amounts for working
      the
      permit lands.




The
      key
      challenge in producing kerogen shale lies in finding a technically economic
      commercial process. We have entered into a letter agreement with a major
      chemical company to jointly examine the possibility of commercial exploitation
      of the oil shale deposits through a multi-phase work program. We are in the
      initial research phase of this agreement and no conclusions can be made at
      this
      time.




We
      will
      continue to examine the overall prospects for this project in 2006, including
      evaluating future exploration drilling programs, investigating commercial
      potential of the resource identified to date, and conversion of WPC's oil shale
      exploration permits to development leases, if appropriate.




*Apex
      Joint Ventures*




7


In
      conjunction with our focus on oil sands and oil shale exploration we have
      entered into three joint venture agreements with Apex Engineering Inc., an
      Alberta corporation, whereby we have agreed to fund research and development
      of
      emerging technologies as follows:




·
            During
                the year ended April 30, 2005 the Company entered into a joint venture
                agreement (the "Sulfoxy Joint Venture") to fund research and development
                relating to the improvement of bitumen recovery from surface mineable
                oil
                sands ore and in-situ recovery of bitumen and heavy oils by oxidation
                and
                sulfonation of asphaltens as to $183,642 ($205,220 CDN) to obtain
                a 60%
                interest. Upon earning a 60% interest in the joint venture the Company
                may
                elect to purchase an additional 15% joint venture interest for $1,342,282
                ($1,500,000 CDN). During the year ended April 30, 2006 the Company
                incurred $126,341 (2005 - $0) in costs related to this joint
                venture;




·
            During
                the year ended April 30, 2006 the Company entered into a joint venture
                agreement (the "NST Joint Venture") to fund research and development
                relating to non segregated tailing ('NST") production technology
                as to
                $402,684 ($450,000 CDN) to obtain a 40% interest and has incurred
                $30,883
                (2005 - $0) in costs related to this joint
                venture;




·
            During
                the year ended April 30, 2006 the Company entered into a joint venture
                agreement (the "IVPT Joint Venture") to fund research and development
                relating to inclined vibrating plate thickener ("IVPT") technology
                as to
                $447,427 ($500,000 CDN) to obtain a 40% interest. During the year
                ended
                April 30, 2006 the Company incurred $77,209 (2005 - $0) in costs
                related
                to this joint venture; and




·
            During
                the year ended April 30, 2006 CanWest entered into a joint venture
                agreement (the "CaO Joint Venture") whereby by expending $178,971
                ($200,000 CDN) on research and development we will obtain a 50% interest.
                During the year ended April 30, 2006 CanWest incurred $0 in
                costs.




*Energy
      51 Inc.*




On
      April
      7, 2004, we entered into an equity participation and farmout agreement with
      Energy 51 Inc. ("Energy 51"). Energy 51 is a privately held Alberta company
      engaged in the exploration and development of oil and gas primarily in Alberta.
      As part of this agreement we had the right to participate on all prospects
      generated by Energy 51. We participated in two prospects during fiscal year
      ended April 30, 2006 incurring $654,996. One prospect has been abandoned and
      the
      other is being evaluated by Energy 51. We currently own a 1.8% equity interest
      in Energy 51 and no longer maintain a right to participate in future Energy
      51
      prospects.




Government
      Regulation




Our
      business is subject to various federal, provincial and local laws and
      governmental regulations that may be changed from time to time in response
      to
      economic or political conditions. In Saskatchewan, the legislated mandate for
      the responsible development of the province's oil and gas resources is set
      out
      in the *The
      Department of Energy and Mines Act* that
      provides the Minister with the responsibility for the exploration, development,
      management and conservation of non-renewable resources. *The
      Oil and Gas Conservation Act* allows
      the orderly exploration for, and development of, oil and gas in the province
      and
      optimizes recovery of these resources. The exploration of oil shales, which
      includes oil sands, is regulated under The *Oil
      Shale Regulations,* 1964, as
      amended from time to time, made under *The
      Mineral Resources Act, 1959* .
      These
      regulations apply to oil shale rights that are the property of the Province
      and
      establish the terms under which exploration permits and leases are granted.
      Since 2005, the Province of Saskatchewan has undertaken a consultation review
      process with all stakeholders in an effort to update the oil sands and oil
      shale
      regulations. This update is intended to align regulations better with other
      regimes in the country and to encourage exploration and development activity
      in
      the Province.




8


In
      Alberta, oil sands activities are legislated under the *Mines
      & Minerals Act* which
      governs the management and disposition of rights in Crown owned mines and
      minerals, including the levying and collecting of bonuses, rental and royalties.
      The *Oil
      Sands Conservation Act* establishes
      a regulatory regime and scheme of approvals administered by the AEUB for the
      development of oil sands resources and related facilities in Alberta. The Acts
      are supported by the following regulations: *Oil
      Sands Tenure Regulation* , *Oil
      Sands Royalty Regulation* 1984, *Oil
      Sands Royalty Regulation* ,
      1997, *Experimental
      Oil Sands Royalty Regulation* , *Oil
      Sands Conservation Regulation* , *Mines
      and Minerals Administration Regulation* .




Regardless
      of provincial jurisdiction, we are required to comply with the environmental
      guidelines and regulations established at the federal, provincial and local
      levels for our field activities and access requirements on our permit lands
      and
      leases. Any development activities, when determined, will require, but not
      be
      limited to, detailed and comprehensive environmental impact assessments studies
      and approvals of federal, provincial and local regulators. Each provincial
      jurisdiction also maintains specific royalty regimes that will be applied to
      all
      oil sands and oil shale development projects consistent with other resource
      developments.




Employees




CanWest
      has four employees, including T. Murray Wilson, the Chairman and Chief Executive
      Officer of the Company. OQI currently has six employees, including Christopher
      H. Hopkins, President and Chief Executive Officer, and Karim Hirji, Chief
      Financial Officer. CanWest relies extensively on the services of its officers
      and directors, as well as the services of the officers and directors of OQI.
      Following the completion of the acquisition of OQI shares not currently owned
      by
      us, the consolidated entities will have approximately 16 employees due to the
      increased operations activity.




Risk
      Factors




Our
      securities are highly speculative and involve a high degree of risk, including
      among other items the risk factors described below. You should carefully
      consider the following risk factors and other information in this 10-KSB before
      deciding to invest in us.




RISKS
      RELATED TO OUR BUSINESS:




*Due
      to Our History of Operating Losses, We are Uncertain That We Will Be Able to
      Maintain Sufficient Cash to Accomplish Our Business Objectives*




The
      consolidated financial statements have been prepared assuming thet we will
      continue as a going concern. During the fiscal years ended April 30, 2006 and
      2005 we suffered net losses of $52,640,903 and $5,109,073, respectively. At
      April 30, 2006 there was stockholders' equity and working capital of $16,163,502
      and $3,838,216, respectively. There is no assurance that we can generate net
      income, increase revenues or successfully explore and exploit our properties.




See
      "Plan
      of Operation" for a description of management's plans in regard to this issue.
      The financial statements do not include any adjustments relating to the
      recoverability and classification of assets or the amounts and classification
      of
      liabilities that might be necessary should we be unsuccessful in implementing
      these plans.




9


*Our
      Business Plan is Highly Speculative and its Success Depends, In Part, On
      Exploration Success on the Permit Lands*




Our
      business plan is focused primarily on the exploration for oil sands deposits
      on
      the Permit Lands in the Province of Saskatchewan. Exploration itself is highly
      speculative. We are subject to all of the risks inherent in oil sands
      exploration and development, including identification of commercial projects,
      operation and revenue uncertainties, market sizes, profitability, market demand,
      commodity price fluctuations and the ability to raise further capital to fund
      activities. There can be no assurance that we will be successful in overcoming
      these risks. These risks are further concentrated by our dependence on OQI
      as
      our primary asset.




THE
      BUSINESS OF OIL SANDS EXPLORATION IS SUBJECT TO MANY RISKS:




*Nature
      of Oil Sands Exploration and Development*




Oil
      sands
      exploration and development is very competitive and involves many risks that
      even a combination of experience, knowledge and careful evaluation may not
      be
      able to overcome. As with any petroleum property, there can be no assurance
      that
      commercial deposits of bitumen will be produced from the Permit Lands or the
      Eagles Nest Prospect. Furthermore, the marketability of any discovered resource
      will be affected by numerous factors beyond our control. These factors include,
      but are not limited to, market fluctuations of prices, proximity and capacity
      of
      pipelines and processing equipment, equipment availability and government
      regulations (including, without limitation, regulations relating to prices,
      taxes, royalties, land tenure, allowable production, importing and exporting
      of
      oil and gas and environmental protection). The extent of these factors cannot
      be
      accurately predicted, but the combination of these factors may result in us
      not
      receiving an adequate return on invested capital.




*Reserves
      and Resources*




We
      have
      not yet established any reserves. There are numerous uncertainties inherent
      in
      estimating quantities of bitumen resources, including many factors beyond our
      control, and no assurance can be given that the recovery of bitumen will be
      realized. In general, estimates of recoverable bitumen resources are based
      upon
      a number of factors and assumptions made as of the date on which the resource
      estimates were determined, such as geological and engineering estimates which
      have inherent uncertainties and the assumed effects of regulation by
      governmental agencies and estimates of future commodity prices and operating
      costs, all of which may vary considerably from actual results. All such
      estimates are, to some degree, uncertain and classifications of resources are
      only attempts to define the degree of uncertainty involved. For these reasons,
      estimates of the recoverable bitumen, the classification of such resources
      based
      on risk of recovery, prepared by different engineers or by the same engineers
      at
      different times, may vary substantially. No estimates of commerciality or
      recoverable bitumen resources can be made at this time, if ever.




*Capital
      Requirements and Liquidity*




Significant
      amounts of capital will be required to explore the Permit Lands, Eagles Nest
      Prospect and the Pasquia Hills Oil Shale Prospect. The only source of future
      funds presently available to us is through the sale of additional equity capital
      and borrowing funds or selling a portion of our interest in our assets. There
      is
      no assurance that any additional equity capital or borrowings required will
      be
      obtainable on terms acceptable to us, if at all. Failure to obtain such
      additional financing could result in delays or indefinite postponement of
      further exploration and development of our projects. Equity financing, if
      available, may result in substantial dilution to existing
      stockholders.




10


*Government
      Regulations, Permits, Leases and Licenses*




The
      business of resource exploration and development is subject to substantial
      regulation under Canadian provincial and federal laws relating to the
      exploration for, and the development, upgrading, marketing, pricing, taxation,
      and transportation of oil sands bitumen and related products and other matters.
      Amendments to current laws and regulations governing operations and activities
      of oil sands exploration and development operations could have a material
      adverse impact on our business. In addition, there can be no assurance that
      income tax laws, royalty regulations and government incentive programs related
      to the Permit Lands, the Eagles Nest Prospect and the Pasquia Hills Oil Shale
      Prospect and the oil sands industry generally, will not be changed in a manner
      which may adversely affect our progress and cause delays, inability to explore
      and develop or abandonment of these interests.




Permits,
      leases, licenses, and approvals are required from a variety of regulatory
      authorities at various stages of exploration and development. There can be
      no
      assurance that the various government permits, leases, licenses and approvals
      sought will be granted in respect of our activities or, if granted, will not
      be
      cancelled or will be renewed upon expiry. There is no assurance that such
      permits, leases, licenses, and approvals will not contain terms and provisions
      which may adversely affect our exploration and development activities.




*Third
      Party Liability and Environmental Liability*




The
      Company's operations could result in liability for personal injuries, property
      damage, oil spills, discharge of hazardous materials, remediation and clean-up
      costs and other environmental damages. We could be liable for environmental
      damages caused by previous property owners. As a result, substantial liabilities
      to third parties or governmental entities may be incurred, and the payment
      of
      such liabilities could have a material adverse effect on our financial condition
      and results of operations. We currently have a limited amount of insurance
      and,
      at such time as we commence additional operations, we expect to obtain and
      maintain additional insurance coverage for our operations, including limited
      coverage for sudden environmental damages, but we do not believe that insurance
      coverage for environmental damage that occurs over time is available at a
      reasonable cost. Moreover, we do not believe that insurance coverage for the
      full potential liability that could be caused by sudden environmental damages
      is
      available at a reasonable cost. Accordingly, we may be subject to liability
      or
      may lose substantial portions of our properties in the event of certain
      environmental damages. The Company could incur substantial costs to comply
      with
      environmental laws and regulations.




*Royalty
      Regime*




Any
      development project of our resource assets will be directly affected by the
      royalty regime applicable. The economic benefit of future capital expenditures
      for the project is, in many cases, dependent on a satisfactory royalty regime.
      There can be no assurance that the provincial governments will not adopt a
      new
      royalty regime that will make capital expenditures uneconomic or that the
      royalty regime currently in place will remain unchanged.




*Impact
      of the Kyoto Protocol*




In
      late
      2002 the Government of Canada ratified the Kyoto Protocol, an international
      agreement designed to manage greenhouse gas emissions and on February 16, 2005
      it became effective. Other than as described in the 2005 Kyoto Plan, relatively
      few details regarding its implementation in Canada have been made by the federal
      government. Numerous uncertainties regarding details of the Kyoto Protocol's
      implementation remain and there can be no assurance that future rules and
      regulations will not affect our ability to operate as planned.




11


*Abandonment
      and Reclamation Costs*




We
      are
      responsible for compliance with terms and conditions of environmental and
      regulatory approvals and all laws and regulations regarding the abandonment
      of
      the project and reclamation of its lands at the end of its economic life, which
      abandonment and reclamation costs may be substantial. A breach of such
      legislation and/or regulations may result in the issuance of remedial orders,
      the suspension of approvals, or the imposition of fines and penalties, including
      an order for cessation of operations at the site until satisfactory remedies
      are
      made. It is not possible to estimate with certainty the abandonment and
      reclamation costs since they will be a function of regulatory requirements
      at
      the time.




*Title
      Risks*




None
      of
      the Exploration Permits or the Pasquia Hills Oil Shale Prospect permits have
      been converted to development leases. In the event that we do not meet the
      regulated expenditure requirements, or development conditions to convert our
      permits to leases or obtain an extension of such development requirements,
      our
      right to explore for bitumen or oil shale, as applicable, may be lost. We are
      satisfied that we have good and proper right, title and interest in and to
      the
      permits that we intend to exploit. However, we have not obtained title opinions
      on any of our interests. Accordingly, ownership of the oil sands exploration
      rights could be subject to prior unregistered agreements or interests or
      undetected claims or interests.




Aboriginal
      peoples have claimed aboriginal title and rights to a substantial portion of
      western Canada. Certain aboriginal peoples have filed a claim against the
      Government of Canada, the Province of Alberta, certain governmental entitles
      and
      the regional municipality of Wood Buffalo (which includes the City of Fort
      McMurray, Alberta) claiming, among other things, aboriginal title to large
      areas
      of lands surrounding Fort McMurray. Similar claims could be made in the Province
      of Saskatchewan and elsewhere. If any such claim relating to lands on which
      we
      have rights was successful, it could have a significant adverse effect on our
      ability to conduct our business.




*Operational
      Hazards*




Our
      exploration and development activities are subject to the customary hazards
      of
      operation in remote areas. A casualty occurrence might result in the loss of
      equipment or life, as well as injury, property damage or other liability. While
      we maintain limited insurance to cover current operations, our property and
      liability insurance may not be sufficient to cover any such casualty occurrences
      or disruptions. Equipment failures could result in damage to our facilities
      and
      liability to third parties against which we may not be able to fully insure
      or
      may elect not to insure because of high premium costs or for other reasons.
      Our
      operations could be interrupted by natural disasters or other events beyond
      our
      control. Losses and liabilities arising from uninsured or under-insured events
      could have a material adverse effect on the business, our financial condition
      and results of our operations.




ENVIRONMENTAL
      AND REGULATORY COMPLIANCE MAY IMPOSE SUBSTANTIAL COSTS ON US.




Our
      operations are or will be subject to stringent federal, provincial and local
      laws and regulations relating to improving or maintaining environmental quality.
      Environmental laws often require parties to pay for remedial action or to pay
      damages regardless of fault. Environmental laws also often impose liability
      with
      respect to divested or terminated operations, even if the operations were
      terminated or divested many years ago.




12


Our
      exploration activities and drilling programs are or will be subject to extensive
      laws and regulations governing prospecting, development, production, exports,
      taxes, labor standards, occupational health, waste disposal, protection and
      remediation of the environment, protection of endangered and protected species,
      mine safety, toxic substances and other matters. Exploration and drilling is
      also subject to risks and liabilities associated with pollution of the
      environment and disposal of waste products. Compliance with these laws and
      regulations will impose substantial costs on us and will subject us to
      significant potential liabilities.




Costs
      associated with environmental liabilities and compliance have increased over
      time, and we expect these costs to continue to increase in the future. We will
      be required to book reserves for the costs of environmental obligations on
      our
      financial statements for such liabilities as our exploration operations
      proceed.




THE
      LOSS
      OF CURRENT MANAGEMENT MAY MAKE IT DIFFICULT FOR US TO OPERATE:




*Reliance
      on Key Personnel*




Investors
      must rely upon the ability, expertise, judgment, discretion, integrity and
      good
      faith of our management and directors. The Company's success is dependent upon
      its management, key personnel and key consultants. The unexpected loss or
      departure of any of our key officers, employees or consultants could be
      detrimental to our future success. We do not maintain key man insurance on
      our
      management.




FLUCTUATIONS
      IN U.S. AND CANADIAN DOLLAR EXCHANGE RATES MAY HAVE A MATERIAL ADVERSE
      IMPACT




Commodity
      prices and costs related to the Company's activities, if and when applicable,
      will generally be based on a U.S. dollar market price. Fluctuations in the
      U.S.
      and Canadian dollar exchange rate may cause a negative impact on revenue and
      costs and could have a material adverse impact on the Company.




VOTING
      CONTROL OF OQI MAY NOT CONTINUE DUE TO DILUTION




At
      July
      18, 2006, we held 12,432,367 common shares of OQI representing 64% of the issued
      and outstanding shares of OQI. Although we have entered into the Reorganization
      Agreement with OQI providing for the acquisition of the remaining common shares
      of OQI that we do not already own, the agreement is subject to a number of
      conditions precedent, some of which are out of our control. There can be no
      assurance the transaction contemplated by the Reorganization Agreement will
      be
      completed. If the transaction is not completed and if our interest in OQI is
      diluted, we may lose voting control over OQI.




RISKS
      RELATING TO OUR COMMON STOCK:




*We
      Have Numerous Outstanding Options, Warrants and Commitments to Issue Shares,
      Which May Adversely Affect The Price of Our Common Stock*




We
      have
      reserved 19,730,879 shares of our Common Stock for issuance upon exercise of
      outstanding options under plans and warrants at prices as low as $0.34 per
      share. The Company has also agreed to issue: (i) 1,961,900 shares to
      certain creditors of API; and (ii) 2,702,026 shares pursuant to the penalty
      provisions of the December, 2005 private placement. Pursuant to the
      Reorganization Agreement with OQI providing for the acquisition of the remaining
      common shares of OQI entered into subsequent to April 30, 2006 the Company
      may
      be required to issue approximately 74 million shares of its Common Stock for
      all
      of the OQI shares not controlled by CanWest.  Any
      sale
      into the public market of our Common Stock purchased privately at prices below
      the current market price could be expected to have a depressive effect on the
      market price of our Common Stock. See "Market for the Registrant's Common Stock
      and Related Stockholder Matters - Market Information."




13


*Future
      Sales of our Common Stock May Cause our Stock Price to Decline*




Our
      stock
      price may decline by future sales of our shares or the perception that such
      sales may occur. If we issue additional shares of Common Stock in private
      financings under an exemption from the registration laws, then those shares
      will
      constitute "restricted shares" as defined in Rule 144 under the Securities
      Act
      of 1933 (the "Act"). The restricted shares may only be sold if they are
      registered under the Act, or sold under Rule 144, or another exemption from
      registration under the Act.




Some
      of
      our outstanding restricted shares of Common Stock are either eligible for sale
      pursuant to Rule 144 or have been registered under the Act for resale by the
      holders. We are unable to estimate the amount, timing, or nature of future
      sales
      of outstanding Common Stock. Sales of substantial amounts of our Common Stock
      in
      the public market may cause the stock's market price to decline. See "Market
      for
      the Registrant's Common Stock and Related Stockholder Matters - Market
      Information."




*We
      Do
      Not Expect to Pay Dividends*




We
      have
      not paid dividends since inception on our Common Stock, and we do not
      contemplate paying dividends in the foreseeable future on our Common Stock
      in
      order to use all of our earnings, if any, to finance expansion of our business
      plans.




*Lack
      of Trading Market May Make It Difficult To Sell Our Common
      Stock*




The
      only
      trading in our Common Stock is conducted on the Over-the Counter ("OTC")
      Bulletin Board. As a result, an investor may find it more difficult to dispose
      of, or to obtain accurate quotations as to the market value of, the Common
      Stock. In addition, our Common Stock is defined as a "penny stock" by rules
      adopted by the U.S. Securities and Exchange Commission. In such event, brokers
      and dealers effecting transactions in the Common Stock with or for the account
      of a customer must obtain the written consent of a customer prior to purchasing
      the Common Stock, must obtain certain information from the customer and must
      provide certain disclosures to such customer. These requirements may have the
      effect of reducing the level of trading in the secondary market, if any, of
      the
      Common Stock and reducing the liquidity of the Common Stock.





*Our
      Stock Price Can Be Extremely Volatile*




Our
      Common Stock is traded on the OTC Bulletin Board. As a result, an investor
      may
      find it more difficult to dispose of, or to obtain accurate quotations as to
      the
      market value of, the Common Stock. There can be no assurance that an active
      public market will continue for the Common Stock, or that the market price
      for
      the Common Stock will not decline below its current price. Such price may be
      influenced by many factors, including, but not limited to, investor perception
      of us and our industry and general economic and market conditions. The trading
      price of the Common Stock could be subject to wide fluctuations in response
      to
      announcements of our business developments or those of our competitors,
      quarterly variations in operating results, and other events or factors. In
      addition, stock markets have experienced extreme price volatility in recent
      years. This volatility has had a substantial effect on the market prices of
      companies, at times for reasons unrelated to their operating performance. Such
      broad market fluctuations may adversely affect the price of our Common
      Stock.




14


*Issuance
      of Preferred Stock and Our Anti-Takeover Provisions Could Delay or Prevent
      a
      Change in Control and May Adversely Affect our Common Stock.*




We
      are
      authorized to issue 10,000,000 shares of preferred stock which may be issued
      in
      series from time to time with such designations, rights, preferences and
      limitations as our Board of Directors may determine by resolution. The rights
      of
      the holders of our Common Stock will be subject to and may be adversely affected
      by the rights of the holders of any of our preferred stock that may be issued
      in
      the future. Issuance of a new series of preferred stock, or providing desirable
      flexibility in connection with possible acquisitions and other corporate
      purposes, could make it more difficult for a third party to acquire, or
      discourage a third party from acquiring our outstanding shares of Common Stock
      and make removal of the Board of Directors more difficult. We have no shares
      of
      Preferred Stock currently issued and outstanding, however, our Board of
      Directors adopted a stockholders rights plan in March 2006 and reserved 250,000
      shares of Series A Junior Participating Preferred Stock. This stockholders
      rights plan could have the effect of discouraging, delaying or preventing an
      acquisition. The Company has no present plans to issue any additional shares
      of
      preferred stock.




**Item
      2.**   **DESCRIPTION
      OF PROPERTY**




OQI
      Permit Lands




OQI
      currently has a direct 100% interest in Saskatchewan Oil Shale Exploration
      Permits Nos. PS00205, PS00206, PS00207, PS00208, PS00209, PS00210, PS00211,
      PS00212, PS00213, PS00214, PS00215, PS00216, PS00217, granted on June 1, 2004
      under the provisions of the *Oil
      Shale Regulations* ,
      1964,
      as amended from time to time by the Province of Saskatchewan, subject to certain
      royalties discussed earlier under "General Development of the Business -
      Oilsands Quest Inc. - Gross Overriding Royalties on OQI Permit
      Lands".




The
      Exploration Permits are subject to rental payments and certain levels of
      expenditure annually on the applicable lands pursuant to government regulations
      discussed earlier under "General Development of Business - OQI - Exploration
      Permits". OQI is in compliance with the current expenditure
      requirements.




Pasquia
      Hills Oil Shale Prospect




WPC
      currently has a 100% interest in Saskatchewan Oil Shale Exploration Permits
      Nos.
      PS00185, PS00186, PS00197, and PS00198, granted under the provisions of the *Oil
      Shale Regulations* ,
      1964,
      as amended from time to time by the Province of Saskatchewan. The permits cover
      an area of approximately 337,775 acres and are located in east-central
      Saskatchewan, approximately 200 km northeast of Saskatoon. The WPC permits
      are
      scheduled to expire in 2006 unless extensions to the permits are granted or
      the
      permit lands are converted to leases. See "General Development of the Business
      -
      The Company's Other Business Opportunities - Western Petrochemical Corporation
      ("Pasquia Hills Oil Shale Prospect")".




Eagles
      Nest Prospect




Township
      acquired Alberta Oil Sands Lease No. 7405080355, the Eagles Nest Prospect,
      in an
      Alberta Crown Sale. This lease is subject to royalties payable to: (i) the
      holders of certain CanWest convertible notes (royalties payable at the rate
      of
      $0.0058 (CDN) on each barrel of crude bitumen produced, saved and sold from
      the
      prospect); and (ii) the Triple 7 Joint Venture (royalties payable at the
      aggregate rate of $0.009 CDN on each barrel of crude bitumen produced, saved
      and
      sold from the prospect, or $382,295 ($450,000 CDN) per year, whichever is
      greater). The royalty payable to the Triple 7 Joint Venture will be secured
      by a
      lien, first charge, or security interest on the prospect. See "General
      Development of the Business - The Company's Other Business Opportunities -
      Township Petroleum Corporation ("Eagles Nest Prospect")".




15


Office
      Leases




During
      the fiscal year ended April 30, 2006 we maintained our corporate headquarters
      at
      206-475 Howe Street, Vancouver, British Columbia, Canada V6C 2B3. In May 2006,
      we relocated our corporate headquarters to Calgary.




OQI
      maintains it offices at 1005, 550 - 11th Avenue S.W. Calgary, Alberta, T2P
      3H6
      under a lease at market rates which expires in 2009. OQI leased 4677 square
      feet
      of office space on July 1, 2006. The lease is at market rates and expires in
      2
      years. CanWest and OQI will relocate their corporate offices to
      205, 707 - 7th Avenue SW, Calgary Alberta T2P 3H6 on July 24,
      2006.




Production




Effective
      April 30, 2006 we did not have any production or production revenue on any
      of
      our properties.




**Glossary
      of Common Terms**




The
      terms
      defined in this section are used throughout this Form 10-KSB.




API
            
            American
                Petroleum Institute.Bbl
            
            BarrelBitumen
            
            A
                highly viscous oil which is too thick to flow in its native state,
                and
                which cannot be produced without altering its viscosity. The density
                of
                bitumen is generally less than 10 degrees API (as that term is defined
                by
                the American Petroleum Institute).BOEs
            
            Barrels
                of oil equivalent.Core
                hole, Stratigraphic test well,
              or
                Exploration Stratigraphic test well
            
            A
                drilling effort, geologically directed, to obtain information pertaining
                to a specific geologic condition. Ordinarily, such wells are drilled
                without the intention of being completed for hydrocarbon production.
                They
                include wells for the purpose of core tests and all types of expendable
                holes related to hydrocarbon exploration.
              
              Stratigraphic
                test wells are classified as
              
              (a)
                "exploratory type" if not drilled into a proved property; or
              
              (b)
                "development type", if drilled into a proved property.
              
              Development
                type stratigraphic wells are also referred to as
              "evaluation
                wells".




16


Crude
                oil
            
            A
                mixture that consists mainly of pentanes and heavier hydrocarbons,
                which
                may contain sulphur and other non-hydrocarbon compounds, that is
                recoverable at a well from an underground reservoir and that is liquid
                at
                the conditions under which its volume is measured or estimated. It
                does
                not include solution gas or natural gas liquids.Degrees
                API
            
            A
                measure of hydrocarbon density.Exploration
                costs
            
            Costs
                incurred in identifying areas that may warrant examination and in
                examining specific areas that are considered to have prospects that
                may
                contain oil and gas reserves, including costs of drilling exploratory
                wells and exploratory type stratigraphic test wells.In-situ
            
            In
                its original place; in position; in-situ recovery refers to various
                methods used to recover deeply buried bitumen deposits, including
                steam
                injection, solvent injection and firefloods.Lease
            
            An
                agreement granting to the lessee rights to explore, develop and exploit
                a
                property.Reserves
            
            Estimated
                remaining quantities of crude oil and natural gas and related substances
                anticipated to be recoverable from known accumulations, from a given
                date
                forward, based on:
              
              (a)
                analysis of drilling, geological, geophysical and engineering
                data;
              
              (b)
                the use of established technology; and
              
              (c)
                specified economic conditions, which are generally accepted as being
                reasonable, and which are disclosed.Resources
            
            Those
                quantities of oil and gas estimated to exist originally in naturally
                occurring accumulations.
              
              Resources
                are, therefore, those quantities estimated on a particular date to
                be
                remaining in known accumulations plus those quantities already produced
                from known accumulations plus those quantities in accumulations yet
                to be
                discovered.
              
              Resources
                are divided into:
              
              (a)
                discovered resources, which are limited to knownaccumulations;
                and
              
              (b)
                undiscovered resources.Unproved
                property
            
            A
                property or part of a property to which no reserves have been specifically
                attributed.Working
                interest
            
            The
                operating interest that gives the owner the right to drill, produce
                and
                conduct operating activities on the property and to share in the
                production.




17


**Item
      3.**  **LEGAL
      PROCEEDINGS** ****




We
      were
      issued a Cease Trade Order by the British Columbia Securities Commission on
      January 27, 2006 because we did not file trading reports with the B.C.
      Securities Commission disclosing distributions to B.C. residents. The Cease
      Trade Order was removed on February 27, 2006 and it did not apply to our
      securities trading through a market outside Canada.




**Item
      4.**  **SUBMISSION
      OF MATTERS TO A VOTE OF SECURITY HOLDERS**




None.




**PART
      II**




**Item
      5.**  **MARKET
      FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS**




*Market
      Information*




The
      Company's Common Stock is traded on the NASD OTC Bulletin Board under the symbol
      CWPC. The following table sets forth the high and low closing prices of the
      Company's Common Stock during the periods indicated as reported by the Internet
      source Yahoo Finance ( *http://finance.yahoo.com* ).
      The
      quotations below reflect inter-dealer prices, without retail mark-up, mark-down
      or commission and may not represent actual transactions.




**Fiscal
                Quarter**
            
            **High
                Bid Price**
            
            **Low
                Bid Price****Fiscal
                Year End**
              **April
                30, 2006**
            4thQuarter (2/1/06 - 4/30/06)
              3rdQuarter
                (11/1/05- 1/31/06)
              2ndQuarter (8/1/05 - 10/31/05)
              1stQuarter (5/1/05 - 7/31/05)
            
            $8.30
              $5.52
              $3.32
              $0.45
            
            $4.01
              $1.64
              $0.43
              $0.37**Fiscal
                Year End**
              **April
                30, 2005**
            4thQuarter (2/1/05 - 4/30/05)
              3rdQuarter
                (11/1/04- 1/31/05)
              2ndQuarter (8/1/04 - 10/31/04)
              1stQuarter (5/1/04 - 7/31/04)
            
            $0.51
              0.38
              0.53
              0.68
            
            $0.30
              0.26
              0.32
              0.33





The
      closing price of the Common Stock as reported on July 18, 2006, was $3.73 per
      share.




*Holders*




As
      of
      July 18, 2006, there were 175 holders of the Company's Common Stock, who
      collectively held 122,218,808 issued and outstanding shares of Common
      Stock.




*Dividends*




The
      Company did not declare or pay cash or other dividends on its Common Stock
      during the last two calendar years. The Company has no plans to pay any
      dividends, although it may do so if its financial position changes.




*Equity
      Compensation Plans Information* **




The
      Company's Board of Directors adopted the 2005b and 2006 Stock Option Plans
      (the
      "Plan") without stockholder approval. The Plans are intended to provide
      incentives to officers, employees, consultants and advisers (including members
      of the Board of Directors), who contribute to the success of the Company by
      offering them the opportunity to acquire an ownership interest in it. The Board
      of Directors believes that this also will help to align the interests of our
      management and employees with the interests of stockholders. The terms of the
      Plans concerning the incentive options and non-qualified options are
      substantially the same except that only employees of the Company or its
      subsidiaries are eligible to receive incentive options. Non-qualified options
      may be granted to employees, officers and consultants of the Company.




18




The
      number of shares reserved for issuance under the Plans is a maximum aggregate
      so
      that the number of incentive options and/or non-qualified options that may
      be
      granted reduces the number of bonuses which may be granted, and vice versa.




*Administration
      of the Plans*




The
      Plans
      are administered by the Board of Directors, or a committee appointed by the
      Board of Directors (the "Committee"). In addition to determining who will be
      granted options or bonuses, the Committee has the authority and discretion
      to
      determine when options and bonuses will be granted and the number of options
      and
      bonuses to be granted. The Committee also may determine a vesting and/or
      forfeiture schedule for bonuses and/or options granted, the time or times when
      each option becomes exercisable, the duration of the exercise period for options
      and the form or forms of the agreements, certificates or other instruments
      evidencing grants made under the Plans. The Committee may determine the purchase
      price of the shares of Common Stock covered by each option and determine the
      fair market value per share. The Committee also may impose additional conditions
      or restrictions not inconsistent with the provisions of the Plans. The Committee
      may adopt, amend and rescind such rules and regulations as in its opinion may
      be
      advisable for the administration of the Plans.




The
      Committee also has the power to interpret the Plans and the provisions in the
      instruments evidencing grants made under it, and is empowered to make all other
      determinations deemed necessary or advisable for the administration of it.




*Eligibility*




Participants
      in the Plans may be selected by the Committee from employees, officers,
      consultants and advisors (including Board members) of the Company and its
      subsidiary and affiliated companies. The Committee may take into account the
      duties of persons selected, their present and potential contributions to the
      success of the Company and such other considerations as the Committee deems
      relevant to the purposes of the Plans. As of July 18, 2006, there are
      approximately two employees (including two officers) who are eligible to
      participate in the Plans.




The
      grant
      of options or bonuses under the Plans does not confer any rights with respect
      to
      continuation of employment, and does not interfere with the right of the
      recipient or the Company to terminate the recipient's employment, although
      a
      specific grant of options or bonuses may provide that termination of employment
      or cessation of service as an employee, officer, or consultant may result in
      forfeiture or cancellation of all or a portion of the bonuses or options.




*Adjustment*




In
      the
      event a change, such as a stock split, is made in our capitalization which
      results in an exchange or other adjustment of each share of Common Stock for
      or
      into a greater or lesser number of shares, appropriate adjustments will be
      made
      to unvested bonuses and in the exercise price and in the number of shares
      subject to each outstanding option. The Committee also may make provisions
      for
      adjusting the number of bonuses or underlying outstanding options in the event
      we effect one or more reorganizations, recapitalizations, rights offerings,
      or
      other increases or reductions of shares of our outstanding Common Stock. Options
      and bonuses may provide that in the event of the dissolution or liquidation
      of
      the Company, a corporate separation or division or the merger or consolidation
      of the Company, the holder may exercise the option on such terms as it may
      have
      been exercised immediately prior to such dissolution, corporate separation
      or
      division or merger or consolidation; or in the alternative, the Committee
      may provide that each option granted under the Plans shall terminate as of
      a
      date fixed by the Committee.




19




*Other
      Provisions*




The
      exercise price of any option granted under the Plans must be no less than 100%
      of the "fair market value" of our Common Stock on the date of grant. Any
      incentive stock option granted under the Plans to a person owning more than
      10%
      of the total combined voting power of the Common Stock shall be at a price
      of no
      less than 110% of the fair market value per share on the date of grant.




The
      exercise price of an option may be paid in cash, in shares of our Common Stock
      or other property having a fair market value equal to the exercise price of
      the
      option, or in a combination of cash, shares and property. The Committee shall
      determine whether or not property other than cash or Common Stock may be used
      to
      purchase the shares underlying an option and shall determine the value of the
      property received.




*Income
      Tax Consequences of the Plans*




The
      incentive options issuable under the Plans are structured to qualify for
      favorable tax treatment to recipients provided by Section 422 of the
      Internal Revenue Code of 1986, as amended (the "Code"). Pursuant to
      Section 422 of the Code, optionees will not be subject to federal income
      tax at the time of the grant or at the time of exercise of an incentive option.
      In addition, provided that the stock underlying the option is not sold within
      two years after the grant of the option and is not sold within one year
      after the exercise of the option, then the difference between the exercise
      price
      and the sales price will be treated as long-term capital gain or loss. An
      optionee also may be subject to the alternative minimum tax upon exercise of
      his
      options. The Company will not be entitled to receive any income tax deductions
      with respect to the granting or exercise of incentive options or the sale of
      the
      Common Stock underlying the options. The exercise price of incentive options
      granted cannot be less than the fair market value of the underlying Common
      Stock
      on the date the options were granted. In addition, the aggregate fair market
      value (determined as of the date an option is granted) of the Common Stock
      underlying the options granted to a single employee which become exercisable
      in
      any single calendar year may not exceed the maximum permitted by the Code for
      incentive options. This amount currently is $100,000. No incentive option may
      be
      granted to an employee who, at the time the option would be granted, owns more
      than ten percent of the outstanding stock of the Company unless the exercise
      price of the options granted to the employee is at least 110 percent of the
      fair market value of the stock subject to the option and the option is not
      exercisable more than five years from the date of grant.




Non-qualified
      options will not qualify for the special tax benefits given to incentive options
      under Section 422 of the Code. An optionee does not recognize any taxable
      income at the time he or she is granted a non-qualified option. However, upon
      exercise of the option, the optionee recognizes ordinary income for federal
      income tax purposes measured by the excess, if any, of the then fair market
      value of the shares over the exercise price. The ordinary income recognized
      by
      the optionee will be treated as compensation and will be subject to income
      tax
      withholding by the Company (if an employee) or self-employment tax (if a
      non-employee). Upon an optionee's sale of shares acquired pursuant to the
      exercise of a non-qualified option, any difference between the sale price and
      the fair market value of the shares on the date when the option was exercised
      will be treated as long-term or short-term capital gain or loss. Upon an
      optionee's exercise of a non-qualified option, the Company will be entitled
      to a
      tax deduction in the amount recognized as ordinary income to the optionee
      (provided that the Company effects withholding with the respect to the deemed
      compensation if the optionee is an employee).




20


With
      respect to bonuses, generally, a grantee will recognize as ordinary income
      the
      fair market value of the bonuses as of the date of receipt. If the grantee
      is an
      employee, then the grant is compensation and will be subject to income tax withholding by us (if an
      employee) or self-employment tax (if a non-employee).






The
      following table gives information about the Company's Common Stock that may
      be
      issued upon the exercise of options, warrants and rights under the Company's
      compensation plans as of April 30, 2006




**Plan
                Category**
            **(a)
                Number of Securities to be Issued Upon Exercise of Outstanding Options,
                Warrants and Rights**
            
            **(b)
                Weighted Average Exercise Price of Outstanding Options, Warrants
                and
                Rights**
            
            **(c)
                Number of Securities Remaining Available for Future Issuance Under
                Equity
                Compensation Plans (Excluding Securities Reflected in Column
                (a))**Equity
                Compensation Plans Approved by Stockholders
            -0-
            
            $
                N/A
            
            -0-Equity
                Compensation Plans Not Approved by Stockholders
            2,650,000(1)
            
            $2.95
            
            2,000,000TOTAL
            2,650,000(1)
            
            $2.95
            
            2,000,000




(1)
            Includes:
                (i) options to acquire 400,000 shares of Common Stock under the Company’s
                2005 Stock Option Plan; (ii) options to acquire 2,050,000 shares
                of common
                stock under the Company’s 2006 Stock Option Plan; and (iii) warrants to
                acquire 200,000 shares of Common Stock pursuant to a consultant agreement
                with Murdock Capital.





*Recent
      Sales of Unregistered Securities*




Following
      are descriptions of all unregistered equity securities of the Company sold
      during the last fiscal quarter, excluding transactions that were previously
      reported on Form 10-QSB or Form 8-K during the period.




On
      March
      27, 2006 the Company issued 99,180 shares of Common Stock to investors pursuant
      to the conversion of convertible notes. No commission or other remuneration
      was
      paid or given in connection with this transaction. The Common Stock was issued
      in reliance on the exemption from registration contained in Section 3(a)(9)
      of
      the Securities Act of 1933 (the "Securities Act").




On
      March
      28, 2006 the Company issued shares of Common Stock upon the cashless exercise
      of
      outstanding options as to 96,625 shares of Common Stock to Terry Schorn. No
      commission or other remuneration was paid or given in connection with this
      transaction. The Common Stock was issued in reliance on the exemption from
      registration contained in Section 3(a)(9) or Section 4(2) of the Securities
      Act.




21


On
      April
      6, 2006 the Company issued 271,865 shares of Common Stock pursuant to
      shareholders of WPC pursuant to a purchase agreement. No commission or other
      remuneration was paid or given in connection with this transaction. The Common
      Stock was issued in reliance on the exemption from registration contained in
      Section 4(2) of the Securities Act.




On
      April
      11, 2006 the Company issued 69,101 shares of Common Stock to Libra Finance
      pursuant to the exercise of warrants exercisable at $0.45 per share. No
      commission or other remuneration was paid or given in connection with this
      transaction. The Common Stock was issued in reliance on the exemption from
      registration contained in Section 4(2) of the Securities Act.




On
      April
      11, 2006 the Company issued 2,691,877 shares of Common Stock to investors
      pursuant to the conversion of convertible notes. No commission or other
      remuneration was paid or given in connection with this transaction. The Common
      Stock was issued in reliance on the exemption from registration contained in
      Section 3(a)(9) of the Securities Act.




On
      April
      13, 2006 the Company issued 287,985 shares of Common Stock to investors pursuant
      to the conversion of convertible notes. No commission or other remuneration
      was
      paid or given in connection with this transaction. The Common Stock was issued
      in reliance on the exemption from registration contained in Section 3(a)(9)
      of
      the Securities Act.




On
      April
      13, 2006 the Company issued 485,500 shares of Common Stock pursuant to the
      exercise of warrants. No commission or other remuneration was paid or given
      in
      connection with this transaction. The Common Stock was issued in reliance on
      the
      exemption from registration contained in Section 4(2) of the Securities
      Act.




On
      April
      18, 2006 the Company issued 227,246 shares of Common Stock to investors pursuant
      to the exercise of warrants. No commission or other remuneration was paid or
      given in connection with this transaction. The Common Stock was issued in
      reliance on the exemption from registration contained in Section 4(2) of the
      Securities Act.




On
      April
      19, 2006 the Company issued (i) 30,477 shares of Common Stock to consultants
      upon exercise of outstanding options; and (ii) 1,758,311 shares of Common Stock
      to investors pursuant to the exercise of warrants. No commission or other
      remuneration was paid or given in connection with this transaction. The Common
      Stock was issued in reliance on the exemption from registration contained in
      Section 4(2) of the Securities Act.




On
      April
      19, 2006 the Company issued 50,000 shares of Common Stock to consultants upon
      the cashless exercise of outstanding options. No commission or other
      remuneration was paid or given in connection with this transaction. The Common
      Stock was issued in reliance on the exemption from registration contained in
      Section 3(a)(9) or Section 4(2) of the Securities Act.




On
      April
      19, 2006 the Company issued 1,240,655 shares of Common Stock to investors
      pursuant to the conversion of convertible notes. No commission or other
      remuneration was paid or given in connection with this transaction. The Common
      Stock was issued in reliance on the exemption from registration contained in
      Section 3(a)(9) of the Securities Act.




On
      April
      28, 2006 the Company issued 67,500 bonus shares of Common Stock to consultants
      pursuant to the 2006 Stock Option Plan. No commission or other remuneration
      was
      paid or given in connection with this transaction. The Common Stock was issued
      in reliance on the exemption from registration contained in Section 4(2) of
      the
      Securities Act.




22


On
      April
      28, 2006 the Company issued 1,066,006 shares of Common Stock to consultants.
      No
      commission or other remuneration was paid or given in connection with this
      transaction. The Common Stock was issued in reliance on the exemption from
      registration contained in Section 4(2) of the Securities Act.




**Item
      6.**  **MANAGEMENT'S
      DISCUSSION AND ANALYSIS OR PLAN OF OPERATION**




Cautionary
      Statement about Forward-Looking Statements




This
      Annual Report on Form 10-KSB includes certain statements that may be deemed
      to
      be "forward-looking statements." All statements, other than statements of
      historical facts, included in this Form 10-KSB that address activities, events
      or developments that our management expects, believes or anticipates will or
      may
      occur in the future are forward-looking statements. Such forward-looking
      statements include discussion of such matters as:




·
            The
                amount and nature of future capital, development and exploration
                expenditures;




·
            The
                timing of exploration activities;




·
            Business
                strategies and development of our business plan and drilling programs;
                and




·
            Potential
                estimates as to the volume and nature of petroleum deposits that
                are
                expected to be found present when lands are developed in a
                project.




Forward-looking
      statements also typically include words such as "anticipate", "estimate",
      "expect", "potential", "could" or similar words suggesting future outcomes.
      These statements are based on certain assumptions and analyses made by us in
      light of our experience and our perception of historical trends, current
      conditions, expected future developments and other factors we believe are
      appropriate in the circumstances. Such statements are subject to a number of
      assumptions, risks and uncertainties, including such factors as the volatility
      and level of oil and natural gas prices, currency exchange rate fluctuations,
      uncertainties in cash flow, expected acquisition benefits, exploration drilling
      and operating risks, competition, litigation, environmental matters, the
      potential impact of government regulations, and other matters discussed under
      the caption "Risk Factors," many of which are beyond our control. Readers are
      cautioned that forward-looking statements are not guarantees of future
      performance and that actual results or developments may differ materially from
      those expressed or implied in the forward-looking statements.




The
      Company is under no duty to update any of these forward-looking statements
      after
      the date of this report. You should not place undue reliance on these
      forward-looking statements.




Plan
      of Operation .
      ( *All
      amounts are in US dollars unless otherwise indicated.)*




The
      Company, including all of its subsidiaries, is in the exploration stage and
      does
      not currently have any income from operating activities. The Company expects
      to
      use a majority of its existing working capital on exploration activities to
      be
      conducted by its subsidiaries. Each CanWest subsidiary has its own cash
      requirements for the next twelve months, as described below. These cash
      requirements will likely be met by loans or capital contributions from CanWest.
      Management of CanWest intends to raise additional capital through the issuance
      of equity and or debt to finance operations of its subsidiaries, however, no
      assurance can be given that the Company will be successful in its exploration
      activities, in raising additional capital or obtaining other funding necessary
      to meet the cash requirements of CanWest and each of its subsidiaries.




23


*Oilsands
      Quest Inc.*




As
      described under "General Development of the Business", OQI completed its initial
      Phase I exploration drilling program in April, 2006 at a cost of $6,233,599.
      OQI's current budget for its upcoming exploration programs to be conducted
      over
      the next 12 months is $35.6 million ($40 million CDN). The Company is now
      preparing for its summer exploration program budgeted to cost $4.5 million
      ($5
      million CDN). Subject to regulatory approval, this program will include
      geophysical evaluation programs and drilling in the area of the west block
      discovery. Environmental and archaeological survey work will also be undertaken.
      OQI will conduct a second drilling program in winter 2006, which will consist
      of
      150 holes. Regulatory approval has been received for this program, including
      the
      construction of 80 kilometers of new access roads (of which 36 kilometers have
      already been completed) to link the proposed drill sites. Up to an additional
      100 holes may also be drilled in winter 2006 subject to regulatory approval.
      The
      budget for the expanded winter program is $31.1 million ($35 million CDN).
      In
      this area of Saskatchewan, the winter drilling season, which is dependent on
      weather conditions, is typically from November to April. Eight drilling rigs
      and
      the related infrastructure expenditures have been committed to the 2006 planned
      work.




To
      finance the continued exploration activities of OQI, on July 5, 2006, CanWest
      completed a private placement of 5,668,100 of its Common Stock for gross
      proceeds of $33,684,009, minus $1,852,659 in commissions paid to the placement
      agents. The stock was issued on a flow through basis whereby the gross proceeds
      must be used for exploration in Canada and the tax benefits from that
      exploration will flow through to the subscribers. CanWest then used the net
      proceeds of this offering to purchase 703,054 OQI common shares on a flow
      through basis for $33,684,048 whereby OQI has agreed to renounce an amount
      of
      exploration expenditures equal to CanWest's commitment to its subscribers.




OQI
      believes that it has sufficient funding to complete the upcoming summer and
      winter 2006 exploration programs. Additional funding will be required if the
      current exploration programs are increased in scope or changes are made to
      current plans or if the option to purchase the 2.5% GORR is exercised. Cash
      requirements over the next two years are expected to be in the $44.7 million
      ($50 million CDN) to $89.5 million ($100 million CDN) range and will be
      dependent on the results of the exploration drilling programs, success in
      obtaining further exploration permits and the ability to finance the planned
      expenditures.




During
      the year ended April 30, 2006 OQI incurred the following significant
      expenditures:




·
            OQI
                completed the purchase of the remaining 51% interest in the Permit
                Lands
                by paying $357,540.




·
            In
                total OQI incurred exploration costs of $6,233,599 for the year ended
                April 30, 2006.




On
      April
      30, 2006 we held 11,729,313 OQI common shares, representing 62.75% of the issued
      and outstanding shares of OQI. By July 12, 2006, our ownership percentage had
      increased to 64%. On July 18, 2006, OQI had $35.9 million cash on hand to meet
      its working capital and exploration activities requirements.




*Township
      Petroleum Corporation*




As
      described under "General Development of the Business", Township acquired the
      Eagles Nest Oil Sands Lease for $727,187 in August, 2005 and incurred $176,732
      in exploration costs while undertaking the planning of an exploration strategy
      for the Eagles Nest Prospect. We are currently evaluating our exploration
      strategy for the area and anticipate our exploration budget for the next 12
      months to be approximately $4.5 million. In addition, pursuant to Township's
      acquisition of the option to acquire the 2.5% GORR disclosed under "Gross
      Overriding Royalties on the OQI Permit Lands", Township will require $16,778,523
      ($18,750,000 CDN) to fund the acquisition if we choose to exercise the option.
      In order to fund Township's requirements we will need to obtain financing.
      There
      can be no assurance that financing will be available on reasonable terms, if
      at
      all.




24


*Western
      Petrochemicals Corporation*




As
      described under "General Development of the Business", we completed the
      acquisition of all the shares of WPC and certain of the Pasquia Hills Oil Shale
      Permits. We currently have a 100% interest in Saskatchewan Oil Shale Exploration
      Permits Nos. PS00185, PS00186, PS00197, and PS00198, which cover an area of
      approximately 337,775 acres. These permits are scheduled to expire in 2006
      unless extensions to the permits are granted or the permit lands are converted
      to leases. At this point in time we have not budgeted any amounts for working
      the permit lands and we have not made a decision whether to allow the permits
      to
      lapse.




During
      the year ended April 30, 2006 the Company spent $645,798 on an exploration
      drilling program and we continue to examine the overall prospects for the
      Pasquia Hills Oil Shale Prospect, including evaluating future drilling programs,
      investigating commercial potential of the resource identified to date, the
      acquisition of additional exploration lands and conversion of its existing
      oil
      shale exploration permits to development leases, if appropriate.




*Other
      Operations*




The
      Company expended $654,996 in exploration costs related to two farmout projects
      with Energy 51 Inc. We do not currently intend to participate in future Energy
      51 projects. The Company has participated in four joint venture agreements
      with
      Apex Engineering Inc. During the year ended April 30, 2006, the Company incurred
      $234,433 in costs, which have been included in exploration costs. In order
      to
      earn our full joint venture interest the Company will need to incur up to an
      additional $978,291. However, we do not expect to materially participate in
      any
      projects in the future.




Liquidity
      and Capital Resources




During
      the year ended April 30, 2006 the Company was focused on raising funding to
      complete the acquisition of the Exploration Permits, the acquisition of the
      Eagles Nest Oil Sands Lease, to provide funding for its exploration programs
      and
      for general working capital purposes. To facilitate these funding requirements
      the Company raised capital through the issuance of Common Stock and
      debt.




On
      June
      9, 2005 CanWest issued 7% convertible debentures for an aggregate principal
      amount of $2,000,000. Pursuant to this offering CanWest issued 500,000, warrants
      to purchase that same number of shares of Common Stock at an exercise price
      of
      $0.45 until June 9, 2007, 5,000,000 warrants to purchase that same number of
      shares of Common Stock at an exercise price of $0.55 per share until June 9,
      2007 and 2,500,000 warrants to purchase that same number of shares of Common
      Stock at an exercise price of $1.50 until June 9, 2007. In conjunction with
      this
      offering CanWest has paid $200,000 in consultants fees and recorded a non-cash
      financing expense of $1,561791. The balance outstanding pursuant to these
      convertible debentures as at April 30, 2006 was $0, as a result of the
      conversion of $2,426,318 of principal and interest into 4,043,864
      shares  of
      Common
      Stock.




During
      August 2005, to finance the acquisition of the Eagles Nest Prospect CanWest
      entered into a
      private
      placement of its securities whereby CanWest issued 8% convertible debentures
      with stock purchase warrants for an aggregate principal amount of $5,200,000
      (the "Original Offering"). Under the terms of the Original Offering, the
      debentures are convertible into shares of CanWest’s Common Stock at an exercise
      price of $0.40
      per
      share. However, pursuant to the subscription agreement, amounts not expended
      on
      successful bids, associated costs and first year rentals are to be refunded
      on a
      pro-rata basis. The refunded amount totaled $4,472,813, as only $727,187 was
      used in connection with the acquisition of the Eagles Nest Oil Sands Lease
      and
      related costs. Under the terms of the Original Offering, the purchasers will
      also receive bonus shares of Common Stock equal to 10% of the refunded amount
      allocable to the respective purchasers, which bonus shares will be issued at
      the
      rate of $0.40 per share. Also, purchasers will receive warrants based on one
      warrant per $0.40 invested, after the refunded amount has been distributed
      to
      the purchaser. The warrants are exercisable for two years from the issue date
      at
      an exercise price of $0.55 per share of Common Stock.





25


Effective
      August 31, 2005, some of the purchasers elected not to receive their pro-rata
      portion of the refund amount. Rather, those purchasers elected to be included
      under amended terms to the Original Offering (the "Amended Offering"). Under
      the
      terms of the Amended Offering, a purchaser will receive a new convertible
      promissory note in the amount of their principal investment not refunded which
      is convertible into shares of CanWest’s Common Stock at a per share conversion
      price of $0.90 per share. The purchaser will also receive one warrant for each
      $0.90 of principal invested in the Amended Offering. Each warrant is exercisable
      to purchase one share of Common Stock at an exercise price of $1.30 per share
      for one year.





Of
      the
      total $5,200,000 raised in the Original Offering, $727,187 convertible notes
      were issued under the Original Offering along with 1,817,967 warrants to
      purchase that same number of shares of Common Stock at $0.55 until September
      19,
      2007, $2,339,602 was refunded along with 584,878 shares of Common Stock at
      a
      deemed cost of $233,951 which has been recorded as a non-cash financing
      expense ****** in
      2006,
      $2,133,186 convertible notes were issued pursuant to the Amended Offering along
      with 2,370,206 warrants to purchase that same number of shares of Common Stock
      at $1.30 until September 19, 2006 and 555,670 shares of Common Stock were issued
      to consultants at a deemed cost of $222,268 which were included in consulting
      expenses in 2006.




The
      subscription agreements relating to the Original Offering and Amended Offering
      contain certain registration rights for the shares of Common Stock issuable
      upon
      conversion of the notes, the exercise of the underlying warrants, bonus shares
      issued and shares of Common Stock issued to consultants. CanWest failed to
      meet
      its registration right commitments on a timely basis and as such has accrued
      $315,151 in penalties. During the year ended April 30, 2006 CanWest issued
      1,758,253 shares of Common Stock pursuant to the Original Offering and 2,319,200
      shares of Common Stock pursuant to the Amended Offering. As at April 30, 2006
      $55,929, including accrued penalties, remained outstanding under the Original
      Offering which was satisfied by the issuance of 179,961 shares of Common Stock
      subsequent to April 30, 2006 and $239,999, including accrued penalties, remained
      outstanding under the Amended Offering which was satisfied by the issuance
      of
      249,051 shares of Common Stock subsequent to April 30, 2006..




During
      December 2005, CanWest completed a private placement of 15,268,000 units at
      $1.50 per unit whereby it issued 15,268,000 shares of Common Stock and 7,634,000
      warrants at $2.00 until December 12, 2007. Pursuant to this placement CanWest
      paid consultants $528,870 cash plus 260,580 warrants on similar terms as the
      issued warrants. In conjunction with this financing CanWest has also granted
      the
      investors and consultants certain registration rights whereby CanWest has
      undertaken to file a resale registration statement covering the shares of Common
      Stock and shares of Common Stock underlying the warrants within sixty days
      of
      closing, otherwise it shall pay a 2% penalty for each month and part of month
      that it is late in doing so. In addition, CanWest must respond to any queries
      to
      that resale registration statement within two weeks of receipt or else be
      subject to an additional penalty as to 2% for each two weeks thereafter. The
      penalties are payable, at the unit holders election, in either Common Stock
      or
      cash at $1.75 per penalty share. Any penalty shares will also be qualified
      for
      resale by the same registration statement. To date CanWest has not filed the
      required registration statement and estimates that the total number of penalty
      shares that will need to be issued will be 2,889,371 shares of Common Stock
      at a
      deemed cost of $17,312,623, which is included in non cash financing expense
      as
      at April 30, 2006.




26


During
      the year ended April 30, 2006, CanWest also raised an additional $6,283,876
      through the issuance of 9,444,052 shares of Common Stock being issued on the
      exercise of options and warrants. OQI also raised $7,164,062 through the
      issuance of Common Stock to shareholders other than CanWest.




As
      at
      April 30, 2006 the Company had $22,127,315 in cash available.




**Results
      of Operations**




During
      the year ended April 30, 2006 the primary focus of the Company was completing
      the acquisition of the Exploration Permits, obtaining funding for exploration
      programs and accessing and purchasing an additional oil sands property in
      Alberta, the Eagles Nest Oil Sands Lease. During the year ended April 30, 2005,
      the primary focus of the Company had been on the exploration of its Pasquia
      Hills Oil Shale Prospect, completing agreements to purchase the oil sands
      permits in northwestern Saskatchewan and securing additional funding for the
      Company.




As
      a
      result of the above noted financing activities the Company incurred non-cash
      financing expenses of $34,047,988 (2005 - $1,959,557). This includes an accrual
      for a penalty in the amount of $17,312,623 which is related to registration
      rights granted under our December 2005 private placement registration pursuant
      to which 2,889,371 penalty shares may be issued. Also included in non-cash
      financing expenses for the year ended April 30, 2006 was a charge of $2,603,486
      related to the extension of the expiry date of 2,380,000 warrants for one year
      to September 14, 2006. The balance of costs in non-cash financing expense are
      directly related to the Company’s convertible note financing and the issuance of
      warrants.




Consulting
      expenses for the year ended April 30, 2006 of $9,525,155 (2005 - $1,660,055)
      included stock option compensation expenses of $1,315,453 (2005 - $68,552)
      related to the issuance of options to consultants. Consulting fees also included
      fees related to successful financing attempts that were paid in stock and cash
      and totaled $1,055,993 (2005 - $nil). CanWest paid its directors consulting
      fees
      of $966,259 (2005 - $151,500), which included 150,000 bonus shares of Common
      Stock at a deemed cost of $54,000 and an accrual for an additional 141,667
      bonus
      shares of Common Stock at a deemed cost of $732,408. OQI had consulting expenses
      of $796,348 (2005 -$136,047), which included $387,858 (2005 -$79,926) paid
      to
      its directors and officers. Also included in consulting expenses is $5,066,867
      (2005 - $0) pertaining to 3,200,000 shares of Common Stock issued to financial
      advisors, including 1,000,000 shares of Common Stock to a private company with
      a
      CanWest director in common, at a deemed cost of $6,080,000, with the balance
      being included in prepaid expenses.




Exploration
      costs for the year ended April 30, 2006 were $8,291,018 and included $6,232,122
      in costs related to exploration on the Exploration Permits; $654,995 in costs
      related to the Sylvan Lake and Barrhead oil and gas prospects; $234,433 in
      conjunction with the Company’s interests in the technology joint ventures;
      $176,732 in exploration and related work associated with the Eagles Nest Oil
      Sand Lease and $645,798 in exploration and related work on the Pasquia Hills
      Oil
      Shale Permits. Also included in exploration is $233,333 related to a property
      that was written off in prior years and $80,000 pertaining to the repurchase
      of
      a royalty on the Eagles Nest Oil Sands Lease.




27


The
      Company's total exploration costs for the year ended April 30, 2005 were
      $505,098 and primarily involved the expenditure of $243,365 to do a
      pre-feasibility study and evaluation of the Pasquia Hills property. The Company
      also spent $37,004 on exploration work pertaining to its Permit Lands. Pursuant
      to the agreement the Company has with Energy 51 it agreed to participate in
      two
      oil and gas wells and has incurred exploration expenditures of $131,856 related
      to their exploration. Also included in exploration costs was $86,666 pursuant
      to
      an agreement to an interest in a property that was written off in prior years
      and finally $4,207 in exploration work to maintain the Company's 20% interest
      in
      its uranium property.




Advertising
      and promotion costs during the year ended April 30, 2006 of $2,464,812 were
      up
      significantly from the year ended April 30, 2005 where they were $338,428.
      This
      increase can be attributed to the engagement of a firm, which has an OQI
      director in common, to help with the Company's advertising and promotion,
      whereby they were issued 2,000,000 shares of Common Stock for their services
      at
      a deemed cost of $860,000. Also included in advertising and promotional expenses
      for the year ended April 30, 2006 is $375,750 paid in conjunction with the
      Company's financings and $109,686 in advertising and promotion paid by OQI.




Professional
      fees for the year ended April 30, 2006 of $1,055,582 (2005 - $296,941) continues
      to be major expense of the Company as it incurred costs related to its business
      evaluation and financing issues. The 2006 balance included $480,240 in legal
      costs, $128,236 paid to our auditors for audit, tax and related work, $52,496
      in
      costs incurred by OQI and $386,196 in fees paid to employee of the Company
      of
      which included 141,667 shares of Common Stock at a deemed cost of $251,470.




In
      conjunction with its convertible debenture financing the Company incurred
      $580,718 (2005 - $131,597) in interest costs.




In
      2006,
      the Company maintained two separate offices, one in Calgary for OQI and one
      in
      Vancouver for CanWest. It incurred office costs for the year ended April 30,
      2006 of $393,501 (2005 - $68,606). Also during 2005 the Company paid $72,000
      in
      management fees that were related to office related activates which it did
      not
      pay in 2006. The increase in office related costs can be directly related to
      the
      increase volume of activity that the Company experienced during the year ended
      April 30, 2006. Likewise its rent costs for the year ended April 30, 2006 of
      $88,286 (2005 - $34,741) have increased as a result of maintaining the two
      offices. Also, as a result of the increased activity of the Company and its
      financing activities its travel costs have risen significantly to $131,398
      from
      $29,103 in 2005.The Company’s transfer agent fees for the year ended April 30,
      2006 of $170,859 (2005 - $41,311) are up significantly as a result of the
      increased activity in the trading volume of the Company’s shares; its holding an
      annual general meeting; and the inclusion of a $65,000 payment to a senior
      American stock exchange as a listing application.




During
      much of the year ended April 30, 2006, the Company had a significant cash
      balance on hand as it has pre-funded its exploration programs, which resulted
      in
      interest income of $273,304 (2005 - $nil).




During
      the year ended April 30, 2006, the Company sold its interest in its subsidiary
      Anhydride Petroleum (Canada) Inc. for nominal proceeds which resulted in the
      Company recording a $736,782 recovery of exploration expenses pertaining to
      accounts payable by the subsidiary. The Company also settled certain of its
      accounts with WPC creditors at a gain of $199,687 which also was recorded as
      a
      recovery of exploration expenses. During the year ended April 30, 2005 the
      Company down its interest in Earth Energy and incurred a $106,507
      charge.




28


The
      non-controlling shareholders of OQI share of its loss for the year ended April
      30, 2006 was $2,876,686 (2005 - $95,486).




We
      have
      no revenues, and our operating results, profitability and future rate of growth
      depend solely on our ability to successfully implement our business plan and
      our
      ability to raise further funding. We currently have approximately $42,463,400
      in
      cash on hand which we plan to utilize for current and or upcoming exploration
      programs and general working capital purposes. It is expected that the Company
      will continue to need further funding and we plan to fund future operations
      by
      public offerings or private placement of equity or debt securities. However,
      there can be no assurance that debt or equity financing will be available to
      us
      on acceptable terms to meet these requirements.




**Critical
      Accounting Policies**




The
      preparation of financial statements in conformity with generally accepted
      accounting principles requires companies to establish accounting policies and
      to
      make estimates that affect both the amount and timing of the recording of
      assets, liabilities, revenues and expenses. Some of these estimates require
      judgments about matters that are inherently uncertain and therefore actual
      results may differ from those estimates.





A
      detailed summary of all of the Company's significant accountings policies and
      the estimates derived there from is included in Note 2 to the Consolidated
      Financial Statements for the year ended April 30, 2006. While all of the
      significant accounting policies are important to the Company's consolidated
      financial statements, the following accounting policies and the estimates
      derived there from, have been identified as being critical:





·
            Foreign
                currency translation;


·
            Properties
                and exploration stage expenditures;


·
            Income
                taxes; and


·
            Stock
                based compensation.





Foreign
      currency translation





The
      Company's operations and activities are conducted principally in Canada; hence
      the Canadian dollar is the functional currency which is translated into U.S.
      dollars for reporting purposes as follows:





(i)
            Monetary
                assets and liabilities at the rate of exchange in effect as at the
                balance
                sheet date;





(ii)
            Non-monetary
                assets and liabilities at the exchange rates prevailing at the time
                of the
                acquisition of the assets or assumption of the liabilities;
                and,  (iii)
            Revenues and expenditures at the average rate of
              exchange
              for the year.




Gains
      and
      losses arising from this translation of foreign currency are included in other
      comprehensive income (loss) as a separate component of stockholders' equity
      (deficiency).




Properties
      and exploration stage expenditures:





Properties
      represent the capitalized costs of acquisition of natural resource properties
      principally, the right to explore for oil sands deposits in the provinces of
      Alberta and Saskatchewan, Canada and oil shale deposits in the province
      Saskatchewan, Canada.





29


All
      exploration costs incurred to the date of establishing that a property is
      economically recoverable are charged to operations.





Income
      taxes





Income
      taxes are calculated using the liability method of accounting. Temporary
      differences arising from the difference between the tax basis of an asset or
      liability and its carrying amount on the balance sheet are used to calculate
      deferred income tax liabilities or assets. These standards required that the
      deferred income tax asset and liabilities be measured using tax rates and laws
      that are expected to apply when the temporary differences are expected to
      reverse.





Stock-based
      compensation





Effective
      May 1, 2005, the Company applied the intrinsic value method of accounting as
      prescribed by APB Opinion No. 25 "Accounting for Stock Issued to Employees"
      and
      related interpretations, in accounting for options granted to employees. As
      such, compensation expense is recorded on the date of the grant when the market
      price of the underlying stock exceeds the exercise price. SFAS 123 "Accounting
      for Stock-based Compensation" establishes accounting and disclosure requirements
      using the fair value-based method of accounting for stock-based compensation
      plans. As allowed by SFAS 123, the Company elected to continue to apply the
      intrinsic value-based method of accounting described above and has adopted
      the
      disclosure requirements of SFAS 123, as amended by SFAS 148 effective May 1,
      2003.





**Item
      7.**  **FINANCIAL
      STATEMENTS AND SUPPLEMENTARY DATA**




See
      Financial Statements and Supplementary Data following the signature page of
      this
      Form 10-KSB.




**Item
      8.**  **CHANGES
      IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
      DISCLOSURE**




None.




**Item
      8A.**  **Controls
      and Procedures**




Evaluation
      of Disclosure Controls and Procedures




Based
      on
      an evaluation as of the end of the period covered by this annual report, the
      Company's principal executive officer and principal financial officer have
      concluded that the Company's disclosure controls and procedures  (as
      defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the
      "Exchange Act")) are effective for the  purposes set forth in such
      definition.




The
      Company's management has also concluded that the Company's disclosure controls
      and procedures are effective to ensure that information required to be disclosed
      in the Company's reports filed under the Exchange Act is accumulated and
      communicated to management, including the chief executive officer and chief
      financial officer, to allow timely decisions regarding required
      disclosure.




Changes
      in Internal Controls




There
      have not been any changes in the Company's internal controls over financial
      reporting identified in connection with the evaluation discussed above that
      occurred during the Company's last fiscal quarter that have materially affected,
      or are reasonably likely to materially affect, the Company's internal control
      over financial reporting.




30


**ITEM
      8B. Other Information**




The
      following information was required to be reported on a Form 8-K during the
      fourth quarter of the Company's fiscal year, but the Company failed to file
      a
      report on Form 8-K disclosing such information:




On
      March
      27, 2006 the Company issued 99,180 shares of Common Stock to investors pursuant
      to the conversion of convertible notes. No commission or other remuneration
      was
      paid or given in connection with this transaction. The Common Stock was issued
      in reliance on the exemption from registration contained in Section 3(a)(9)
      of
      the Securities Act.




On
      March
      28, 2006 the Company issued shares of Common Stock upon the cashless exercise
      of
      outstanding options as to 96,625 shares of Common Stock to Terry Schorn. No
      commission or other remuneration was paid or given in connection with this
      transaction. The Common Stock was issued in reliance on the exemption from
      registration contained in Section 3(a)(9) or Section 4(2) of the Securities
      Act.




On
      April
      6, 2006 the Company issued 271,865 shares of Common Stock pursuant to
      shareholders of WPC pursuant to a purchase agreement. No commission or other
      remuneration was paid or given in connection with this transaction. The Common
      Stock was issued in reliance on the exemption from registration contained in
      Section 4(2) of the Securities Act.




On
      April
      11, 2006 the Company issued 69,101 shares of Common Stock to Libra Finance
      pursuant to the exercise of warrants exercisable at $0.45 per share. No
      commission or other remuneration was paid or given in connection with this
      transaction. The Common Stock was issued in reliance on the exemption from
      registration contained in Section 4(2) of the Securities Act.




On
      April
      11, 2006 the Company issued 2,691,877 shares of Common Stock to investors
      pursuant to the conversion of convertible notes. No commission or other
      remuneration was paid or given in connection with this transaction. The Common
      Stock was issued in reliance on the exemption from registration contained in
      Section 3(a)(9) of the Securities Act.




On
      April
      13, 2006 the Company issued 287,985 shares of Common Stock to investors pursuant
      to the conversion of convertible notes. No commission or other remuneration
      was
      paid or given in connection with this transaction. The Common Stock was issued
      in reliance on the exemption from registration contained in Section 3(a)(9)
      of
      the Securities Act.




On
      April
      13, 2006 the Company issued 485,500 shares of Common Stock pursuant to the
      exercise of warrants. No commission or other remuneration was paid or given
      in
      connection with this transaction. The Common Stock was issued in reliance on
      the
      exemption from registration contained in Section 4(2) of the Securities
      Act.




On
      April
      18, 2006 the Company issued 227,246 shares of Common Stock to investors pursuant
      to the exercise of warrants. No commission or other remuneration was paid or
      given in connection with this transaction. The Common Stock was issued in
      reliance on the exemption from registration contained in Section 4(2) of the
      Securities Act.




On
      April
      19, 2006 the Company issued (i) 30,477 shares of Common Stock to consultants
      upon exercise of outstanding options; and (ii) 1,758,311 shares of Common Stock
      to investors pursuant to the exercise of warrants. No commission or other
      remuneration was paid or given in connection with this transaction. The Common
      Stock was issued in reliance on the exemption from registration contained in
      Section 4(2) of the Securities Act.




31


On
      April
      19, 2006 the Company issued 50,000 shares of Common Stock to consultants upon
      the cashless exercise of outstanding options. No commission or other
      remuneration was paid or given in connection with this transaction. The Common
      Stock was issued in reliance on the exemption from registration contained in
      Section 3(a)(9) or Section 4(2) of the Securities Act.




On
      April
      19, 2006 the Company issued 1,240,655 shares of Common Stock to investors
      pursuant to the conversion of convertible notes. No commission or other
      remuneration was paid or given in connection with this transaction. The Common
      Stock was issued in reliance on the exemption from registration contained in
      Section 3(a)(9) of the Securities Act.




On
      April
      28, 2006 the Company issued 67,500 bonus shares of Common Stock to consultants
      pursuant to the 2006 Stock Option Plan. No commission or other remuneration
      was
      paid or given in connection with this transaction. The Common Stock was issued
      in reliance on the exemption from registration contained in Section 4(2) of
      the
      Securities Act.




On
      April
      28, 2006 the Company issued 1,066,006 shares of Common Stock to consultants.
      No
      commission or other remuneration was paid or given in connection with this
      transaction. The Common Stock was issued in reliance on the exemption from
      registration contained in Section 4(2) of the Securities Act.




**PART
      III**




**Item
      9.**  **DIRECTORS,
      EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION
      16(A)
      OF THE EXCHANGE ACT**




**MANAGEMENT**




Unless
      otherwise indicated in their employment agreement executive officers of the
      Company are elected by the Board of Directors and serve for a term of one year
      and until their successors have been elected and qualified or until their
      earlier resignation or removal by the Board of Directors. There are no family
      relationships among any of the directors and executive officers of the Company.
      None of the executive officers are currently involved in any legal
      proceedings.




32


The
      following table sets forth the names and ages of all executive officers and
      directors and the positions and offices that each person holds with the
      Company:









**Name
                of Director or Officer and Position in the
                Company**
            
            **Officer
                or Director Since**
            
            **Age**
            
            **Office(s)
                Held and Other Business Experience**T.
                Murray Wilson, President, Chief Executive Officer, Chief Financial
                Officer
                and Chairman of the Board of Directors
            
            May,
                2006 to present
            
            54
            
            President,
                Chief Executive Officer, Chief Financial Officer and Chairman of
                the Board
                from May 1, 2006. Served as Chairman and Managing Partner of Stanway
                Capital Partners from 2001 to present; and from 1997 to 2000, worked
                for
                TD Securities, Inc. as Managing Director and Global Head of Oil & Gas,
                Head of Investment Banking and Corporate Banking, and Vice Chairman
                of TD
                Securities International.Thornton
                J. Donaldson
              Former
                President, Former Chief Financial Officer and Former Director
            
            1998-2002,
                2003 - May, 2006
            
            75
            
            President
                of the Company from April, 1998 to May 16, 2002 and from September
                15,
                2003 until May 1, 2006. President of Rich Coast, Inc., an industrial
                waste
                treatment company located in Dearborn, Michigan from 1984 to 1993,
                and a
                Director of Rich Coast, Inc. from 1993 to 1999. Director of Lorex
                Resources, Ltd., a mineral exploration company located in Vancouver,
                B.C.
                since July 1999. President and sole director of United Corporate
                Advisers
                Ltd., a geological and financial consulting business founded by Mr.
                Donaldson in 1970. Self-employed as a consulting geologist and financial
                advisor from 1978 through the present.William
                G. Timmins
              Secretary,
                Former Director and Current OQI Director
            
            1998
                to 2006
            
            67
            
            Secretary
                of the Company since July 1998. Director of the Company from 1998
                to 2006.
                Self-employed as President of WGT Consultants, Ltd. from 1983 to
                present
                as a geological consultant for numerous mining companies in Canada,
                the
                United States, Central and South America, Australia and New Zealand.
                Director of Monalta Resources Ltd., a mineral exploration company
                located
                in West Vancouver, B.C. from April 1998 to present.




33
 
  **Name
                  of Director or Officer and Position in the
                  Company**
              
              **Officer
                  or Director Since**
              
              **Age**
              
              **Office(s)
                  Held and Other Business
                  Experience**


Christopher
                H. Hopkins
              OQI
                President and Chief Executive Officer and OQI Director
            
            2004
            
            52
            
            President,
                Chief Executive Officer and a director of Oilsands Quest Ltd., a
                subsidiary of the Company since November 10, 2004. Executive Vice
                President of Synenco Energy Inc. ("Synenco"), an oil sands exploration
                company, from October 1999 to September 2004 and a director of Synenco
                from October 1999 until August 2003. Founder, director and Vice President,
                Finance of Thunder Road Resources Ltd., a private oil and gas production
                company, from June 1996 to June 2000. Mr. Hopkins is a management
                professional and businessman with 25 years of Canadian and international
                energy and mining experience. He has held executive positions in
                corporate
                planning and business development with Suncor Inc.'s Oil Sands Group,
                Pembina Corporation and Amoco Canada and has additional management
                experience in environmental control and regulatory affairs in the
                mining
                industry. Mr. Hopkins holds a B.Sc. (Chemistry and Biology) from
                Carleton
                University and a MBA from Queen's University.Karim
                Hirji
              OQI
                Chief Financial Officer
            
            2004
            
            43
            
            Chief
                Financial Officer of Oilsands Quest Inc., a subsidiary of the Company,
                since November 10, 2004. Vice President, Finance and Chief Financial
                Officer of Synenco from November 2001 to June 2004. Vice President,
                Finance and Chief Financial Officer of Anadime Corporation, a public
                oilfield services company, from September 2000 to October 2001. Manager
                of
                Financial Reporting at Enbridge Inc. from January 2000 to April 2000.
                Corporate Controller from 1999 to January 2000 and Assistant Corporate
                Controller from 1997 to 1999 of AGRA Inc., a public engineering company.
                Mr. Hirji brings to the Corporation over 20 years of experience in
                financial management, including significant treasury, project management
                and corporate finance skills. Mr. Hirji received his B.Comm from
                the
                University of Calgary and CA while articling with Deloitte & Touche
                LLP.




34


**Name
                of Director or Officer and Position in the
                Company**
            
            **Officer
                or Director Since**
            
            **Age**
            
            **Office(s)
                Held and Other Business
                Experience**


Romeo
                D'Angela
            
            2005
            
            48
            
            Director
                of the Company since October 2005. President and Director of Novadan
                Capital Ltd., an investment management company, located in Toronto,
                Ontario, from March 2004 to present. Portfolio Manager of the following
                companies: (i) Empire Financial Group from December 1998 to October
                2003;
                (ii) of Bona Visa Asst Mgt Ltd. from December 1997 to November 1998;
                (iii)
                of Hospitals of Ontario Pension Plan (HOOPP) Inv. Mgt Ltd. from July
                1995
                to November 1997; and (iv) Scotia Investment Mgt Ltd. from December
                1993
                to June 1995.Ronald
                Phillips
            
            2006
            
            39
            
            Director
                of the Company since February 2006. A managing member of Saturn Capital
                Management LLC and the Portfolio Manager for the DKR Saturn Event
                Driven
                Program from July 2002 to present. DKR Saturn Event Driven is a $80
                million hedge fund affiliated with DKR Capital Inc., located in Stamford,
                Connecticut. Mr. Phillips is also a director of Admiral Bay Resources,
                Inc., a Coal Bed Methane company incorporated in British Columbia
                and
                traded on the Toronto Stock Exchange.Roderick
                Haverslew
            
            2006
            
            61
            
            Director
                of the Company since March 2006. Vice President of Exploration and
                a
                director of Primary Petroleum Corporation, a Canadian oil and gas
                exploration company located in Calgary, Alberta, from June 2005 to
                present. With over 25 years of diverse oil and gas experience, Mr.
                Haverslew has participated in senior management for oil and gas companies,
                including his position as President of Altamin Resources (1978) Ltd.
                from
                February 1978 to present, and Vice President of Exploration at American
                Leduc Petroleums, Ltd. from January 1994 to February 2000. Mr. Haverslew
                also served on the Board of Directors of American Leduc Petroleums,
                Ltd.,
                a Toronto Stock Exchange listed company, for fifteen
                years.




Except
      as
      indicated in the above table, no director of the Company is a director of an
      entity that has its securities registered pursuant to Section 12 of the Exchange
      Act.




Audit
      Committee




We
      have a
      separately designated standing audit committee established in accordance with
      Section 3(a)(58)(A) of the Exchange Act. The following persons serve on our
      audit committee: Ronald Phillips and Roderick Haverslew. Mr. Phillips and
      Mr. Haverslew are each "independent" as that term is defined in Section
 121A of the American Stock Exchange listing standards and in Item
      7(d)(3)(iv) of Schedule 14A. Mr. Phillips is the financial expert for the audit
      committee.




35


Section
      16(a) Beneficial Ownership Reporting Compliance




Section
      16(a) of the Exchange Act, as amended, requires the Company's officers and
      directors and persons who own more than 10% of the Company's outstanding Common
      Stock to file reports of ownership with the Securities and Exchange Commission
      ("SEC"). Directors, officers, and greater than 10% stockholders are required
      by
      SEC regulations to furnish the Company with copies of all Section 16(a) forms
      they file.




Based
      solely on a review of Forms 3, 4, and 5 and amendments thereto furnished to
      the
      Company during and for the Company's year ended April 30, 2006, and as of July
      18, 2006 there were no directors, officers or more than 10% stockholders of
      the
      Company who failed to timely file a Form 3, 4 or 5, other than Thornton J.
      Donaldson (as to two transactions on two Form 4s), William Timmins (as to
      thirty-three transactions on five Form 4s), and Romeo D'Angela, (as to two
      transactions on two Form 4s).




Code
      of Ethics




On
      July
      28, 2004, our Board of Directors adopted a code of ethics that applies to all
      of
      our officers and employees, including our principal executive officer, principal
      financial officer, principal accounting officer and controller. Our code of
      ethics establishes standards and guidelines to assist our directors, officers,
      and employees in complying with both the Company's corporate policies and with
      the law.




**Item
      10.**  **EXECUTIVE
      COMPENSATION**




*Compensation
      and other Benefits of Executive Officers*




The
      following table sets out the compensation received for the fiscal years April
      30, 2006, 2005 and 2004 in respect to each of the individuals who were the
      Company's chief executive officer at any time during the last fiscal year and
      the Company's most highly compensated executive officers whose total salary
      and
      bonus exceeded $100,000 (the "Named Executive Officers") See "Certain
      Relationships and Related Transactions".




**SUMMARY
                COMPENSATION TABLE****FISCAL
                YEAR COMPENSATION**
            
            **LONG
                TERM COMPENSATION****Awards**
            
            **Payouts****Name
                and**
              **Principal**
              **Position**
            
            **Year**
            
            **Salary**
              **($)**
            
            **Bonus**
              **($)**
            
            **Other**
              **Annual**
              **Compensation****(4)**
            
            **Securities**
              **Underlying**
              **Option/SARs**
              **Granted**
            
            **Restricted
                Shares**
              **or
                Restricted Share**
              **Units**
            
            **LTIP
                Payouts**
              **($)**
            
            **All
                other**
              **Compensation**
              **($)**Thornton
                Donaldson, President(1)
            
            
            2006
              2005
              2004
            
            
            Nil
              $1,500
              Nil
            
            $
              $
              $
            36,000
              110,750(2
              22,100(2
            )
              )
            
            Nil
              Nil
              Nil
            
            
            100,000
              425,000
              130,000
            
            
            Nil
              Nil
              Nil
            
            
            Nil
              Nil
              Nil
            
            
            Nil
              Nil
              NilChristopher
                H. Hopkins(4)
              
              OQI
                President and Chief Executive Officer
            
            
            2006
              2005
            
            $
              $
            148,091
              39,963
            
            
            Nil
              Nil
            
            
            Nil
              Nil
            
            
            100,000
              Nil
            
            
            Nil
              Nil
            
            
            Nil
              Nil
            
            $
            1,736(5
              Nil
            )Karim
                Hirji(4)
              
              OQI
                Chief Financial Officer
            
            
            2006
              2005
            
            $
              $
            148,091
              39,963
            
            
            Nil
              Nil
            
            
            Nil
              Nil
            
            
            Nil
              Nil
            
            
            Nil
              Nil
            
            
            Nil
              Nil
            
            $
            1,736(5
              Nil
            )







(1)
            Mr.
                Donaldson served as President from April, 1998 to May 16, 2002 and
                from
                September 15, 2003 to May 1, 2006.


(2)
            During
                2005, Mr. Donaldson received a bonus of $110,750 (2004 - $22,100)
                which
                was paid by the issuance of 425,000 (2004 - 130,000) shares of Common
                Stock.


(3)
            OQI
                was incorporated on November 20, 1998, but only commenced operations
                on
                September 24, 2004.


(4)
            Messrs.
                Hopkins and Hirji became employees of OQI on May 1, 2005. Prior thereto,
                they were consultants to OQI. All consulting fees charged to OQI
                are
                included as salaries.


(5)
            Premiums
                paid on an extended health benefits program and personal use benefits
                of
                company vehicles are included
                herein.





36


Effective
      May 1, 2006, the OQI Board of Directors increased the compensation of Mr.
      Hopkins and Mr. Hirji to $268,456 ($300,000 CDN), and $223,714 ($250,000 CDN)
      per annum, respectively, and granted Mr. Hopkins 100,000 options to acquire
      Common Stock at $6.00 per share vesting immediately, 100,000 options to acquire
      Common Stock at $25.00 per share vesting immediately, 100,000 options to acquire
      Common Stock at $25.00 per share vesting on completion of the corporate
      reorganization with OQI, and 100,000 options to acquire Common Stock at $25.00
      per share vesting as to 1/3 on the first, second and third anniversary date
      of
      the grant; and Mr. Hirji as to 50,000 options to acquire common shares at $6.00
      per share vesting immediately, 50,000 options to acquire common shares at $25.00
      per share vesting immediately, 50,000 options to acquire common shares at $25.00
      per share vesting on completion of the corporate reorganization, and 100,000
      options to acquire Common Stock at $25.00 per share vesting as to 1/3 on the
      first, second and third anniversary date of the grant. All the options granted
      have a term of five years and are subject to the terms described in "OQI Stock
      Options".




*Employment
      Contracts and Termination of Employment and Change-in-Control
      Arrangements*




On
      May 1,
      2006, the Company entered into an Executive Employment Agreement with T. Murray
      Wilson under which Mr. Wilson will receive an annual base salary of
      $300,000 (CDN) and he is eligible to receive an annual bonus up to 200% of
      his
      annual base salary (the "Base Salary"). In addition to the Base Salary,
      Mr. Wilson will receive: (i) a signing bonus of $100,000; (ii) a further
      lump sum of $17,000 within 30 days of each of the first, second and third months
      following the execution of the Employment Agreement; and (iii) a stock option
      agreement entitling Mr. Wilson to receive 4,000,000 shares of the Company's
      Common Stock at an exercise price equal to the per-share fair market value
      on
      the date of grant and vesting as follows: 1,000,000 on the execution of the
      Employment Agreement; 1,000,000 upon the conclusion of any amalgamation or
      other
      affiliation achieved between the Company and OQI; 1,000,000 upon 12 months
      completed service; and (iii) 1,000,000 upon 24 months completed service.




According
      to the severance terms of the Employment Agreement, upon termination of
      employment by the Company, Mr. Wilson will receive: (i) a lump sum payment
      equal to the monthly Base Salary (the Base Salary divided by 12) as at the
      termination date, multiplied by the number of months in the notice period (which
      is equal to one month for each completed year of service, subject to a minimum
      of 12 months plus one month for each completed year of service); (ii) a further
      lump sum payment equal to the value of Mr. Wilson's benefits; (iii) a further
      lump sum payment equal to the average annual bonus during the term of his
      employment, divided by 12 and multiplied by the number of months in the notice
      period; and (iv) accelerated vesting of all unvested stock options granted
      to
      Mr. Wilson to the extent such stock options would have vested during the notice
      period and a period of 90 days from the termination date in which to exercise
      any unexercised stock options.




Upon
      a
      change in control of the Company, Mr. Wilson will be entitled to receive
      the following compensation: (i) a lump sum payment equal to the monthly Base
      Salary as at the termination date, multiplied by the number of months in the
      notice period times 1.5; (ii) a further lump sum payment equal to the value
      of
      Mr. Wilson's benefits times 1.5; (iii) a further lump sum payment equal to
      the
      average annual bonus, divided by 12 and multiplied by the number of months
      in
      the notice period times 1.5; and (iv) the accelerated vesting of all stock
      options and other unvested incentive compensation granted to Mr. Wilson to
      the
      extent such stock options would have vested during the notice period and a
      period of 90 days from the termination date in which to exercise any unexercised
      stock options.




37


OQI
      has
      management agreements in place with Christopher H. Hopkins, OQI President and
      Chief Executive Officer, and Karim Hirji, OQI Chief Financial Officer, effective
      November 1, 2004. The management agreements provide for annual compensation
      of
      $175,000 (CDN) for each of the OQI executive officers following the
      accomplishment of certain milestones which were achieved by May 1, 2005. OQI
      is
      entitled to terminate the management agreements without cause for a payment
      of
      amount equal to 1.5 times the annual compensation paid to each of Messrs.
      Hopkins and Hirji. Upon the occurrence of a change of control (as defined in
      the
      management agreements) or certain other triggering events, Mr. Hopkins and
      Mr.
      Hirji are entitled to terminate their management agreements and be paid an
      amount equal to 1.5 times their annual compensation.




There
      are
      no other arrangements or understandings between any executive officer and any
      director or other person pursuant to which any person was selected as a director
      or an executive officer.




*Option/Stock
      Appreciation Rights ("SAR") Grants during the most recently completed Fiscal
      Year* .




The
      following table sets out the stock options and stock warrants granted as
      bonuses, which were granted by the Company during 2006 to the Named Executive
      Officers.




**OPTION/SAR
      GRANTS IN PREVIOUS YEAR - 2006**


**INDIVIDUAL
      GRANTS**




**Name**
            
            **Number
                of**
              **Securities**
              **Underlying**
              **Options/SARs**
              **Granted
                (#)**
            
            **%
                of Total**
              **Options/SARs**
              **Granted
                to**
              **Employees
                in**
              **Fiscal
                Year**
            
            **Exercise
                or**
              **Base
                Price ($)**
            
            **Expiration
                Date**Thornton
                Donaldson(1)
            
            100,000(2)
            
            2.05%
            
            $0.36
            
            Nov
                1/06Christopher
                H.
              Hopkins(2)
            
            Nil
            
            N/A
            
            N/A
            
            N/AKarim
                Hirji
            
            Nil
            
            N/A
            
            N/A
            
            N/A







(1)
            Mr.
                Donaldson served as President from April, 1998 to May 16, 2002 and
                from
                September 15, 2003 to May 1, 2006.




(2)
            On
                May 18, 2005 Donaldson was issued 100,000 options at $0.36 per share
                until
                November 1, 2006 which were exercised pursuant to a bonus of $36,000
                on
                January 3, 2006. See "Certain Relationships and Related
                Transactions".




*Aggregated
      Option/SAR Exercised in Last Financial Year and Fiscal Year-End Option/SAR
      Values*




The
      following table sets out all option/SARs and warrants granted as bonuses which
      were exercised by the Named Executive Officers during the most recently
      completed fiscal year and the values of options/SARs and warrants for such
      persons as of the end of the most recently completed fiscal year.




38


**AGGREGATED
      OPTION/SAR EXERCISED IN LAST FINANCIAL YEAR**


**AND
      FISCAL YEAR-END OPTION/SAR VALUES.**




**Name**
            
            **Shares
                Acquired on**
              **Exercise
                (#)**
            
            **Value
                Realized ($)**
            
            **Number
                of Securities Underlying Unexercised Options/SARs at FY-End
                (#)**
              **Exercisable/**
              **Unexercisable**
            
            **Value
                of**
              **Unexercised
                Options/SARs at**
              **FY-End
                ($)**
              **Exercisable/**
              **Unexercisable**Thornton
                Donaldson(1)
            
            100,000
            
            $218,000
            
            Nil
            
            NilChristopher
                H. Hopkins
            
            Nil
            
            Nil
            
            Nil
            
            NilKarim
                Hirji
            
            Nil
            
            Nil
            
            Nil
            
            Nil







(1)
            Mr.
                Donaldson served as President from April, 1998 to May 16, 2002 and
                from
                September 15, 2003 to May 1, 2006.




Compensation
      of Directors .




The
      Company does not have any standard arrangements pursuant to which the Company's
      directors are compensated for services as directors.




The
      directors of the Company are not compensated with cash for their services but
      they may be compensated with stock options. In addition, no pension or
      retirement benefit plan has been instituted by the Company and none is proposed
      at this time. There is no arrangement for compensation with respect to
      termination of the directors in the event of change of control of the Company.




Each
      OQI
      director is eligible to receive stock options of OQI. See "Compensation of
      OQI
      Directors". In addition, effective May 1, 2006, the non-management directors
      of
      OQI are paid the following fees: (i) a retainer of $3000 per fiscal quarter
      ($12,000 annually); (ii) a fee of $1,000 for board meetings attended by a
      director in person or by phone, but not by proxy; (iii) an annual fee of $5,000
      for the chairman of any committee of the board of directors; (iv) an annual
      fee
      of $1,000 for a member (other than the chairman) of any committee of the board
      of directors; and (v) a fee of $1,000 for committee meetings attended by a
      committee member in person or by phone, but not by proxy.




Other
      Arrangements





During
      the fiscal year end April 30, 2006, the Company granted the following stock
      options to the following directors, who are not Named Executive Officers, for
      their services as directors:





To
      Romeo
      D'Angela, the Company granted (i) options to purchase 200,000 shares of Common
      Stock at an exercise price of $1.50 per share, expiring on October 20, 2007;
      and
      (ii) options to purchase 600,000 shares of Common Stock at an exercise price
      of
      $2.58 per share, expiring on January 11, 2008.





To
      Ronald
      Phillips, the Company granted (i) options to purchase 250,000 shares of Common
      Stock at an exercise price of $4.62 per share, expiring on February 8, 2008;
      and
      (ii) options to purchase 250,000 shares of Common Stock at an exercise price
      of
      $4.57 per share, expiring on February 17, 2009.





39


To
      Roderick Haverslew, the Company granted (i) options to purchase 250,000 shares
      of Common Stock at an exercise price of $4.60 per share, expiring on March
      9,
      2008.




**Other
      Compensation of OQI Directors**




The
      Board
      of Directors of OQI may from time to time, in its discretion, grant to
      directors, officers, employees and consultants of OQI the option to purchase
      OQI
      shares. The Board of Directors of OQI determines the price per OQI share and
      the
      number of OQI shares which may be allotted to each director, officer, employee
      and consultant and all other terms and conditions of the OQI option. OQI options
      granted are non-assignable. If prior to the exercise of an OQI option, the
      holder ceases to be a director, officer, employee or consultant of OQI, or
      its
      subsidiary, the option of the holder shall be limited to the number of shares
      purchasable by him immediately prior to the time of his cessation of office
      or
      employment and he will have no right to purchase any other shares. OQI options
      must be exercised within 60 days of termination of employment or cessation
      of
      position with OQI, provided that if the cessation of office, directorship,
      consulting arrangement or employment was by reason of death, the OQI option
      must
      be exercised within 12 months after such death, subject to the expiry date
      of
      such option.




During
      the fiscal year ended April 30, 2006, the following non-employee OQI directors
      received options to acquire OQI shares as compensation for their services as
      directors:




**Option
                Holder**
            
            **Number**
            
            **Exercise
                Price**
              **($CDN)**
            
            **Expiry
                date**W.
                Scott Thompson
              Director
            
            100,000
              100,000
            
            $6.00
              $3.00
            
            December
                15, 2010
              August
                15, 2010Thomas
                Milne
              Director
            
            100,000
              100,000
            
            $0.50
              $6.00
            
            November
                12, 2009
              December
                15, 2010William
                Timmins
              Director
            
            100,000
              100,000
            
            $0.50
              $6.00
            
            November
                12, 2009
              December
                15, 2010








(1)
            Directors who are not also officers of
              OQI. (2)
            These
                OQI shares underlying these options have been reserved for issuance
                however the shares have not yet been
                granted.





Repricing
      of Options .




None




**Item
      11.**  **SECURITY
      OWNERSHIP OF BENEFICIAL OWNERS AND MANAGEMENT**




The
      following table sets forth as of July 18, 2006, the number of shares of the
      Company's Common Stock and OQI common shares beneficially owned by each of
      the
      Company's current directors, the Company's executive officers and each named
      executive officer, and the number of shares beneficially owned by all of the
      Company's current directors and named executive officers as a group:




40






**Name
                and Address of Beneficial Owner**
            
            **Position**
            
            **Amount
                and Nature of CanWest**
              **Beneficial
                Ownership**
            
            **Percent
                of CanWest**
              **Common
                stock**
            
            **Amount
                and Nature of OQI**
              **Beneficial
                Ownership****(9)**
            
            **Percent
                of OQI**
              **Common
                stock****(9)**T.
                Murray Wilson
              Ste
                1005, 550 - 11th Ave S.W.Calgary,
              Alberta
              T2R
                1M7Canada
            
            President,
                CEO and Chairman
            
            2,016,800(1)
            
            1.6%Thornton
                Donaldson
              Ste
                1005, 550 - 11th Ave S.W.Calgary,
              Alberta
              T2R
                1M7Canada
            
            Former
                President and CEO
            
            2,912,000(2)
            
            2.4%William
                G. Timmins
              Ste
                1005, 550 - 11th Ave S.W.Calgary,
              Alberta
              T2R
                1M7Canada
            
            Secretary
                and
              OQI
                Director
            
            481,667(3)
            
            *
            
            260,000
            
            1.1%Romeo
                D'Angela
              Ste
                1005, 550 - 11th Ave S.W.Calgary,
              Alberta
              T2R
                1M7Canada
            
            Director
            
            2,731,654(4)
            
            2.2%
            
            -
            
            -Ronald
                Phillips
              Ste
                1005, 550 - 11th Ave S.W.Calgary,
              Alberta
              T2R
                1M7Canada
            
            Director,
              OQI
                Director
            
            500,000(5)
            
            *
            
            100,000
            
            0.4%Roderick
                Haverslew
              Ste
                1005, 550 - 11th Ave S.W.Calgary,
              Alberta
              T2R
                1M7Canada
            
            Director
            
            250,000(6)
            
            *
            
            -
            
            -Christopher
                Hopkins
              Ste
                1005, 550 - 11th Ave S.W Calgary,
              Alberta
              T2R
                1M7Canada
            
            OQI
                President and Director
            
            16,800(7)
            
            *
            
            2,725,000
            
            11.5%




41
 
  **Name
                  and Address of Beneficial Owner**
              
              **Position**
              
              **Amount
                  and Nature of CanWest**
                **Beneficial
                  Ownership**
              
              **Percent
                  of CanWest**
                **Common
                  stock**
              
              **Amount
                  and Nature of OQI**
                **Beneficial
                  Ownership****(9)**
              
              **Percent
                  of OQI**
                **Common
                  stock****(9)**


Karim
                Hirji
              Ste
                1005, 550 - 11th Ave S.W.Calgary,
              Alberta
              T2R
                1M7Canada
            
            OQI
                Chief Financial Officer and Director
            
            1,000
            
            *
            
            750,000
            
            3.2%All
                current directors, executive officers and named executive officers
                as a
                group (eight persons)
            
            
            
            8,909,921(8)
            
            7.0%
            
            3,835,000
            
            16.2%








*
      Indicates less than one percent.





(1)
            Includes
                options to acquire 2,000,000 shares of Common Stock that have vested
                or
                are expected to vest within 60 days of July 17, 2006; Does not include
                2,000,000 shares of Common Stock that vest after 60 days from July
                17,
                2006. All options are exercisable for 5 years after
                vesting.


(2)
            Includes:
                (i) 22,000 shares of Common Stock owned by Mr. Donaldson’s spouse; (ii)
                955,000 shares of Common Stock owned by United Corporate Advisors,
                Ltd.,
                of which Mr. Donaldson is a control person; (iii) options to acquire
                780,000 shares of Common Stock owned by United Corporate Advisors,
                Ltd.;
                and (iv) options to acquire 300,000 shares of Common Stock. These
                options
                have vested as of July 17, 2006 and are currently exercisable.


(3)
            Includes
                110,000 shares of Common Stock owned by Mr. Timmins'
                spouse. (4)
            Includes: (i) options to acquire 600,000 shares
              of Common
              Stock; (ii) options to acquire 200,000 shares of Common Stock; (iii)
              96,143 shares of Common Stock underlying warrants; (iv) 262,825 shares
              of
              Common Stock underlying warrants; (v) convertible notes to acquire
              96,143
              shares of Common Stock; (vi) and convertible notes to acquire 262,825
              shares of Common Stock. These options, warrants and convertible notes
              have
              vested as of July 17, 2006 and are currently exercisable. Also includes:
              1,213,718 shares of Common Stock held by Novadan Capital, Ltd., of
              which
              Mr. D'Angela has a 25% direct ownership.





(5)
            Includes
                options to acquire 250,000 shares of Common Stock and options to
                acquire
                250,000 shares of Common Stock. These options have vested as of July
                17,
                2006 and are currently exercisable.


(6)
            Includes
                options to acquire 250,000 shares of Common Stock, which have vested
                as of
                July 17, 2006 and are currently
                exercisable.


(7)
            Includes
                8,400 shares of Common Stock held by Mr. Hopkins'
                spouse.


(8)
            Includes
                securities reflected in footnotes 1 -
                7.


(9)
            Includes
                options to purchase common shares of
                OQI.




Security
      Ownership of Certain Beneficial Owners




As
      of
      July 18, 2006, the Company was not aware of any person who beneficially owned,
      or was known to own beneficially, more than 5% of the Company's outstanding
      shares of Common Stock.




42


Securities
      Authorized for Issuance Under Equity Plans




Plan
                Category
            
            Number
                of securities to be issued upon exercise of outstanding options,
                warrants
                and rights
            
            Weighted
                average exercise price of outstanding options, warrants and
                rights
            
            Number
                of securities remaining available for future issuanceEquity
                compensation plans approved by security holders
            
            Nil
            
            N/A
            
            NilEquity
                compensation plans not approved by security holders
            
            2,650,000(1)
            
            $2.95
            
            2,000,000Total
            
            2,650,000(1)
            
            $2.95
            
            2,000,000







(1)
            Includes:
                (i) options to acquire 400,000 shares of Common Stock under the Company’s
                2005 Stock Option Plan; (ii) options to acquire 2,050,000 shares
                of common
                stock under the Company’s 2006 Stock Option Plan; and (iii) warrants to
                acquire 200,000 shares of Common Stock pursuant to a consultant agreement
                with Murdock Capital.






See
      " M arket
      for
      the Registrant's Common Stock and Related Stockholder Matters - Equity
      Compensation Plans Information" for a description of the Company's stock option
      plans.




Changes
      in Control




None




**Item
      12.****CERTAIN
      RELATIONSHIPS AND RELATED TRANSACTIONS**




In
      August
      and September 2005, Mr. D'Angela, a director of the Company, and Novadan Capital
      LP, an entity controlled by Mr. D'Angela until July 18, 2006, participated
      in a
      private placement with the Company whereby the Company issued 8% Convertible
      Notes. The private placement is described in the Management's Discussion and
      Analysis section, above. Mr. D'Angela participated in both the Company's
      Original Offering and the Amended Offering whereas Novadan Capital LP
      participated only in the Original Offering. Novadan Capital Ltd., an entity
      controlled by Mr. D'Angela, received a finder's fee of $85,487 in connection
      with the Original Offering. In December 2005, Novadan Capital Ltd. received
      1,000,000 shares of Common Stock at a deemed value of $1,900,000 to provide
      consulting services to the Company for the six month period ending May, 2006.
      Novadan will receive a royalty on the Eagles Nest Prospect of 0.0027969 per
      barrel for previous financing.




The
      following table summarizes the Company's securities held by Mr. D'Angela and
      his
      affiliated entities as of April 30, 2006:




**Common
                Stock**
            
            **Shares
                Underlying**
              **Convertible
                Notes**
            
            **Shares
                Underlying**
              **Warrants**$0.40
            
            $0.90
            
            $0.55
            
            $1.30Romeo
                D'Angela
            
            Nil
            
            96,143
            
            262,825
            
            96,143
            
            262,825Novadan
                Capital LP
            
            59,135
            
            96,143
            
            Nil
            
            96,143
            
            NilNovadan
                Capital Ltd.
            
            1,213,718
            
            Nil
            
            Nil
            
            Nil
            
            Nil





43


As
      of
      April 30, 2006 Mr. D'Angela exercised voting and investment control over all
      the
      securities described above. Mr. D'Angela no longer controls Novadan Capital
      LP
      as of July 18, 2006 and does not control the Company's Common Stock held by
      Novadan Capital LP.




The
      Company paid to William Timmins a consulting fees of $43,389 and issued him
      50,000 bonus shares of Common Stock, at a deemed cost of $18,000, during the
      fiscal year ended April 30, 2006. Included in accounts payable as at April
      30, 2006 is an accrual for a termination settlement with Mr. Timmins pertaining
      to his resignation from the board as to 41,667 bonus shares of Common Stock,
      at
      a deemed cost of $215,470 which were issued after April 30, 2006.




United
      Corporate Advisors ("UCA") is related to the Company due to control by Thornton
      Donaldson. During the year ended April 30, 2005 UCA converted a $195,000 note
      into 780,000 shares of Common Stock and 780,000 warrants to purchase that same
      number of shares of Common Stock at $0.34 per share until September 30, 2005.
      During the fiscal year ended April 30, 2006 the Company agreed to extend the
      expiry date of these warrants to September 14, 2006. During the fiscal year
      ended April 30, 2006 UCA was paid consulting fees of $136,462 and no amount
      remains owing.




The
      Company issued Thornton Donaldson 100,000 shares of Common Stock upon exercise
      of options, at a deemed cost of $36,000, during the year ended April 30, 2006.
      Also included in accounts payable as at April 30, 2006 is an accrual for a
      termination settlement with Mr. Donaldson pertaining to his resignation from
      the
      board as to 100,000 bonus shares of Common Stock, at a deemed cost of
      $517,000.




Other
      than the transactions stated above, none of the directors or executive officers
      of the Company, nor any person who owned of record or was known to own
      beneficially more than 5% of the Company's outstanding shares of its Common
      Stock, nor any associate or affiliate of such persons or companies, has any
      material interest, direct or indirect, in any transaction that has occurred
      since May 1, 2004, or in any proposed transaction, which has materially affected
      or will affect the Company.




44


**PART
      IV**




**Item
                13.**
            **EXHIBITS**(a) Exhibits3.1
            Articles
                of Incorporation.1,
                10, 123.2
            Bylaws.14.1
            2000
                Stock Option Plan.14.2
            2002
                Stock Option Plan24.3
            2003
                Stock Option Plan34.4
            2005
                Stock Option Plan.74.5
            2005b
                Stock Option Plan.84.6
            2006
                Stock Option Plan.94.7
            Rights
                Agreement, dated as of March 9, 2006, between the Company and
                Computershare Investor Services, Inc., as Rights Agent.1110.1
            Agreement
                between Western Petrochemicals Corp., Powermax Energy, Inc. and Uranium
                Power Corporation dated April 23, 2004.410.2
            Agreement
                between Western Canadian Mint, Inc., et al. and Uranium Power Corporation,
                as amended.510.3
            New
                Licensing Agreement between Earth Energy Resources, Inc., West Peak
                Ventures of Canada, Ltd. and CanWest Petroleum Corporation dated
                March 4,
                2005.710.4
            Convertible
                Note from Oilsands Quest, Inc. due September 29, 2008.610.5
            Sulfoxy
                Joint Venture Agreement dated April 20, 2005.710.6
            Form
                of 7% Convertible Note and Warrant issued June 9, 2005.710.7
            Purchase
                and Sale Agreement with Western Petrochemicals Corp.710.8
            Subscription
                Agreement between the Company and purchasers, dated August 15,
                2005.1010.9
            Amendment
                to Subscription Agreement between the Company and purchasers, dated
                August
                31, 2005.1010.10
            Form
                of 8% Secured Convertible Promissory Note.1010.11
            Joint
                Venture Agreement dated August 9, 2005 between the Company and Triple
                7
                Energy, Inc., West Peak Ventures of Canada Ltd., Dr. Michael Ranger
                and
                Township.10




45


10.12
            Subscription
                Agreement between the Company and purchasers, dated December 12,
                2005.910.13
            Form
                of Warrant, dated December 12, 2005.910.14
            Financing
                Agreement with Oilsands Quest Inc., November 25, 2005.910.15
            Subscription
                Agreement with Dynamic Power Hedge Fund, dated December 12,
                2005.910.16
            Executive
                Employment Agreement with T. Murray Wilson, dated May 1, 2006, enclosed
                herewith.10.17
            Reorganization
                Agreement, dated June 9, 2006.1310.18
            Subscription
                Agreement for Flow-Through Shares with Subscribers, dated July 5,
                2006,
                enclosed herewith.10.19
            Subscription Agreement
              for
              Flow-Through Shares with Oilsands Quest Inc., dated July 5, 2006, enclosed
              herewith.10.20
            Employment
                Agreement with Christopher Hopkins, dated November 1, 2004, enclosed
                herewith.10.21
            Employment
                Agreement with Karim Hirji, dated November 1, 2004, enclosed herewith.14
            Code
                of Ethics421.1
            Subsidiaries
                of the Registrant, enclosed herewith.23.1
            Consent
                of independent auditors, enclosed herewith.31.1
            Certification
                of CEO Pursuant to Exchange Act Rules 13a-14 and 15d-14, as adopted
                pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed
                herewith.31.2
            Certification
                of CFO Pursuant to Exchange Act Rules 13a-14 and 15d-14, as adopted
                pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed
                herewith.32.1
            Certification
                of CEO and CFO Pursuant to 18 U.S.C. Section 1350, as adopted pursuant
                to
                Section 906 of the Sarbanes-Oxley Act of 2002, filed
                herewith.__________________(1)
            Incorporated
                by reference from Form 10-SB, filed October 14, 1999; and Form 8-K,
                filed
                November 29, 2004.(2)
            Incorporated
                by reference from Form S-8, dated March 24, 2003.(3)
            Incorporated
                by reference from Form S-8, dated June 27, 2003.(4)
            Incorporated
                by reference from Form 10-KSB dated July 29, 2004.(5)
            Incorporated
                by reference from Form 10-QSB dated March 22, 2005.(6)
            Incorporated
                by reference from Form 10-QSB dated December 20, 2004.(7)
            Incorporated
                by reference from Form 10-KSB dated July 29, 2005.(8)
            Incorporated
                by reference from Form SB-2 dated December 29, 2005.(9)
            Incorporated
                by reference from Form 10-QSB dated March 22, 2006.(10)
            Incorporated
                by reference from Form 10-QSB dated December 14, 2005.(11)
            Incorporated
                by reference from Form 8-A dated March 13, 2006.(12)
            Incorporated
                by reference from Form 8-K dated March 13, 2006.(13)
            Incorporated
                by reference from Form 8-K dated June 14,
                2006.




46


**Item
      14.**  **PRINCIPAL
      ACCOUNTANT FEES AND SERVICES.**




Pannell
      Kerr Forster ("PKF") serves as our independent registered public accounting
      firm.




Audit
      Fees .




Our
      principal accountant, PKF, billed us aggregate fees in the amount of
      approximately $39,000 for the fiscal year ended April 30, 2006 and approximately
      $18,000 for the fiscal year ended April 30, 2005. These amounts were billed
      for
      professional services that PKF provided for the audit of our annual financial
      statements and the review of the financial statements included in our report
      on
      10-KSB.




Audit-Related
      Fees .




PKF
      billed us aggregate fees in the amount of $70,000 for the fiscal year ended
      April 30, 2006 and $36,000 for the fiscal year ended April 30, 2005 for
      assurance and related services that were reasonably related to the performance
      of the audit or review of our financial statements.




Tax
      Fees .




PKF
      billed us $6,000 for tax compliance for the fiscal year ended April 30, 2006
      and
      nothing for the fiscal year ended April 30, 2005. During the fiscal years ended
      April 30, 2006 and 2005 PKF did not provide any tax advice.




All
      Other Fees,




PKF
      billed us $13,000 in other fees for the fiscal year ended April 30, 2006 and
      nothing for the fiscal year ended April 30, 2005.Our principal accountant
      (through its full time employees) performed all work regarding the audit of
      our
      financial statements for the most recent fiscal year.






Audit
      Committee's Pre-Approval Practice






Section 10A(i) of
      the Exchange Act prohibits our auditors from performing audit services for
      us as
      well as any services not considered to be "audit services" unless such services
      are pre-approved by the audit committee of the Board of Directors, or unless
      the
      services meet certain *de
      minimis* standards. The audit committee's charter (adopted February 15, 2006)
      provides that the audit committee must:




·
            Preapprove
                all audit services that the auditor may provide to us or any subsidiary
                (including, without limitation, providing comfort letters in connection
                with securities underwritings or statutory audits) as required by
                §10A(i)(1)(A) of the Exchange Act (as amended by the Sarbanes-Oxley
                Act of
                2002).




·
            Preapprove
                all non-audit services (other than certain*de
                minimis*services described in §10A(i)(1)(B) of the Exchange Act (as amended by the
                Sarbanes-Oxley Act of 2002)) that the auditors propose to provide
                to us or
                any of our subsidiaries.




The
      audit
      committee considers at each of its meetings whether to approve any audit
      services or non-audit services. In some cases, management may present the
      request. Since the audit committee was created on february 15, 2006, the audit
      committee did not pre-approve the "Tax Fees" and "All Other Fees", which were
      incurred before that date. However, all fees were approved by the entire board
      of directors.




47





**SIGNATURES**




In
      accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934,
      the
      Registrant caused this report to be signed on its behalf by the undersigned,
      thereunto duly authorized.




CANWEST
              PETROLEUM
              CORPORATIONDate: July
              20, 2006
            By:
            /s/ T.
              Murray
              WilsonT.
              Murray Wilson, Chief Executive Officer and
              Chairman(principal
              executive, financial and accounting
              officer)


Date: July
              20, 2006
            By:
            /s/ William
              G. TimminsWilliam
              G. Timmins,
              Secretary







Pursuant
      to the requirement of the Securities Exchange Act of 1934, this report has
      been
      signed below by the following persons on behalf of the Registrant and in the
      capacities and on the dates indicated:




Date: July
              20, 2006
            By:
            /s/ T.
              Murray
              WilsonT.
              Murray Wilson, Director


Date: July
              20, 2006
            By:
            /s/ Ron
              PhillipsRon
              Phillips, Director


Date: July
              20, 2006
            By:
            /s/ Romeo
              D'AngelaRomeo
              D'Angela, Director


Date: July
              20, 2006
            By:
            /s/ Rod
              HaverslewRod
              Haverslew, Director






48




INDEX
        TO
        FINANCIAL STATEMENTS
 
 **CANWEST
        PETROLEUM CORPORATION**
 (An
        Exploration Stage Company)
 **(Stated
        in U.S. Dollars unless otherwise noted)**
 
 INDEX
              PAGE
                  NO.Report
                    of Independent Registered PublicAccounting
                    Firm
              F-1Consolidated
                  Financial StatementsConsolidated
                  Balance Sheets
              F-2Consolidated
                  Statements of Operations
              F-3Consolidated
                  Statements of Stockholders’ Equity (Deficiency)
              F-4
                  to F-6Consolidated
                  Statements of Cash Flows
              F-7Notes
                  to Consolidated Financial Statements
              F-8
                  to F-29
 
 
 F-1
 **REPORT
        OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**
 
 **TO
        THE STOCKHOLDERS’ AND DIRECTORS OF CANWEST PETROLEUM CORPORATION (an Exploration
        Stage Company)**
 
 We
        have
        audited the accompanying consolidated balance sheets of CanWest Petroleum
        Corporation (an Exploration Stage Company) as at April 30, 2006 and 2005
        and the
        related consolidated statements of operations, stockholders’ equity (deficiency)
        and cash flows for each of the three years ended April 30, 2006, 2005 and
        2004
        and the cumulative totals for the exploration stage operations from April
        3,
        1998 (inception) through April 30, 2006. These financial statements are the
        responsibility of the Company’s management. Our responsibility is to express an
        opinion on these financial statements based on our audits.
 
 We
        conducted our audits in accordance with the standards of the Public Company
        Accounting Oversight Board (United States of America). Those standards require
        that we plan and perform an audit to obtain reasonable assurance whether
        the
        financial statements are free of material misstatement. An audit includes
        examining, on a test basis, evidence supporting the amounts and disclosures
        in
        the financial statements. An audit also includes assessing the accounting
        principles used and significant estimates made by management, as well as
        evaluating the overall financial statement presentation. We believe that
        our
        audits provide a reasonable basis for our opinion.
 
 In
        our
        opinion, these financial statements present fairly, in all material respects,
        the consolidated financial position of the Company as at April 30, 2006 and
        2005
        and the results of its operations and its cash flows for each of the three
        years
        ended April 30, 2006, 2005 and 2004 and the cumulative totals for the
        exploration stage operations from April 3, 1998 (inception) through
        April 30, 2006 in conformity with accounting principles generally accepted
        in the United States of America.
 
 
 *“Pannell
        Kerr Forster” (signed)*
 (Registered
        with PCAOB as “Smythe Ratcliffe”)
 
 
 Chartered
        Accountants
 Vancouver,
        Canada
 July
        20,
        2006
 
 F-2
   **CANWEST
        PETROLEUM CORPORATION**
 **(An
        Exploration Stage Company)**
 **Consolidated
        Balance Sheets**
 **(U.S.
        Dollars)**
  **April
                    30,****2006**
                
                **2005****ASSETS****Current**Cash
                
                $
                22,127,315
                
                $
                1,022,175Accounts
                    receivable
                
                
                675,764
                
                
                20,327Exploration
                    advances and deposits
                
                
                -
                
                
                167,283Prepaid
                    expenses (note 11)
                
                
                1,013,333
                
                
                -23,816,412
                
                
                1,209,785**Properties**(note
                    4)
                
                
                17,831,417
                
                
                5,773,464**Investment
                    in Energy 51 Inc.**(note
                    5)
                
                
                310,291
                
                
                310,291**Other
                    Investments**(note
                    6)
                
                
                -
                
                
                816$
                41,958,120
                
                $
                7,294,356**LIABILITIES****Current**Accounts
                    payable (note 7)
                
                $
                19,624,206
                
                $
                2,029,734Convertible
                    debentures (notes 8)
                
                
                295,928
                
                
                876,073Due
                    to Related Parties (note 14)
                
                
                58,062
                
                
                69,68919,978,196
                
                
                2,975,496**Future
                    Income taxes**(note
                    9)
                
                
                1,080,821
                
                
                142,594**Non
                    controlling shareholder interest**(note
                    10)
                
                
                4,735,601
                
                
                448,22425,794,618
                
                
                3,566,314**Commitments
                    and contingencies**(notes
                    3, 4, 6, 7, 8, 9,11,
                    12,13, 14, 15 and 16)**STOCKHOLDERS'
                    EQUITY****Capital
                    Stock**Authorized250,000,000
                    Common stock with a par value of $0.001 each(notes
                    11, 12 and 13)10,000,000
                    Preferred stock with a par value of $0.001 eachIssued115,046,408
                    (2005
                    - 58,408,661) Common stock
                
                
                115,046
                
                
                58,409**Treasury
                    Stock**
                
                
                (23
                )
                
                (23
                )**Additional
                    Paid-in Capital**
                
                
                77,724,943
                
                
                13,835,455**Deficit
                    Accumulated During Exploration Stage**
                
                
                (62,640,868
                )
                
                (9,999,965
                )**Other
                    Comprehensive Income (Loss)**
                
                
                964,404
                
                
                (165,834
                )16,163,502
                
                
                3,728,042$
                41,958,120
                
                $
                7,294,356See
                    Notes to the Consolidated Financial Statements
 F-3
   **CANWEST
        PETROLEUM CORPORATION**
 **(An
        Exploration Stage Company)**
 **Consolidated
        Statements of Operations**
 **(U.S.
        Dollars)**
 
 **From****inception
                    on****April
                    3, 1998****Through****2006**
                
                **2005**
                
                **2004**
                
                **April
                    30, 2006****Expenditures**Non-cash
                    financing expenses
                
                $
                34,047,988
                
                $
                1,959,557
                
                $
                464,598
                
                $
                36,472,143Consulting
                
                
                9,525,155
                
                
                1,660,055
                
                
                391,577
                
                
                11,835,511Exploration
                    costs
                
                
                8,291,018
                
                
                505,098
                
                
                99,685
                
                
                10,115,979Advertising
                    and Promotion
                
                
                2,464,812
                
                
                338,428
                
                
                211,561
                
                
                3,338,742Professional
                    Fees
                
                
                1,055,582
                
                
                296,941
                
                
                176,807
                
                
                1,777,487Interest
                
                
                580,718
                
                
                131,597
                
                
                31,797
                
                
                749,337Office
                
                
                393,501
                
                
                68,606
                
                
                12,869
                
                
                500,918Transfer
                    agent fee
                
                
                170,859
                
                
                41,311
                
                
                13,775
                
                
                250,118Travel
                
                
                131,398
                
                
                29,103
                
                
                36,612
                
                
                282,532Rent
                
                
                88,286
                
                
                34,741
                
                
                14,916
                
                
                164,205Write
                    down of license
                
                
                -
                
                
                106,507
                
                
                -
                
                
                106,507Management
                    fee
                
                
                -
                
                
                72,000
                
                
                126,857
                
                
                414,602Write-off
                    of exploration property
                
                
                -
                
                
                -
                
                
                -
                
                
                856,359Equity
                    loss from investment
                
                
                -
                
                
                -
                
                
                -
                
                
                19,71356,749,317
                
                
                5,243,944
                
                
                1,581,054
                
                
                66,884,153**Other
                    Items**Recovery
                    of exploration costs
                
                
                (936,469
                )
                
                -
                
                
                -
                
                
                (936,469
                )Interest
                    income
                
                
                (273,304
                )
                
                -
                
                
                -
                
                
                (273,304
                )**Net
                    loss before income tax recovery****and
                    non-controlling shareholder interest**
                
                
                55,539,544
                
                
                5,243,944
                
                
                1,581,054
                
                
                65,674,380**Income
                    tax recovery**
                
                
                (21,956
                )
                
                (39,385
                )
                
                -
                
                
                (61,341
                )**Net
                    loss before non-controlling shareholder**
                
                
                55,517,588
                
                
                5,204,559
                
                
                1,581,054
                
                
                65,613,039**interest****Non-controlling
                    shareholder interest**
                
                
                (2,876,685
                )
                
                (95,486
                )
                
                -
                
                
                (2,972,171
                )**Net
                    loss**
                
                $
                52,640,903
                
                $
                5,109,073
                
                $
                1,581,054
                
                $
                62,640,868**Net
                    Loss Per Share**
                
                $
                (0.64
                )
                $
                (0.16
                )
                $
                (0.09
                )**Weighted
                    Average Number of Shares Outstanding**
                
                
                81,989,009
                
                
                31,555,958
                
                
                18,319,647See
                    Notes to the Consolidated Financial
                    Statements
 
 F-4
   **CANWEST
        PETROLEUM CORPORATION**
 **(An
        Exploration Stage Company)**
 **Consolidated
        Statements of Stockholders' Equity (Deficiency)**
 **From
        April 3, 1998 (Inception) Through April 30, 2006**
 **(U.S.
        Dollars)**
 Common
                    Stock
                
                Treasury
                    Stock
                
                Additional
                    paid-
                
                Subscriptions
                
                Other
                    Comprehensive
                
                Deficit
                    Accumulated During the Exploration
                
                Total
                    Sockholders' EquityShares
                
                Par
                    Value
                
                Shares
                
                Par
                    Value
                
                in
                    Capital
                
                received
                
                Income
                
                Stage
                
                (Deficiency)Common
                    stock issued on inception for assets
                
                
                6,000,000
                
                $
                6,000
                
                
                -
                
                $
                -
                
                $
                91,834
                
                $
                -
                
                $
                -
                
                $
                -
                
                $
                97,834Net
                    loss
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                (700
                )
                
                (700
                )**Balance,
                    April 30, 1998**
                
                
                6,000,000
                
                
                6,000
                
                
                -
                
                
                -
                
                
                91,834
                
                
                -
                
                
                -
                
                
                (700
                )
                
                97,134Common
                    stock issuedFor
                    subscriptions
                
                
                1,000,000
                
                
                1,000
                
                
                -
                
                
                -
                
                
                606,005
                
                
                -
                
                
                -
                
                
                -
                
                
                607,005For
                    resource properties
                
                
                200,000
                
                
                200
                
                
                -
                
                
                -
                
                
                137,131
                
                
                -
                
                
                -
                
                
                -
                
                
                137,331Share
                    issue costs
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                (15,586
                )
                
                -
                
                
                -
                
                
                -
                
                
                (15,586
                )Net
                    loss
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                (210,736
                )
                
                (210,736
                )Common
                    stock returned to treasury for cancellation
                
                
                (922,500
                )
                
                (922
                )
                
                -
                
                
                -
                
                
                (554,700
                )
                
                -
                
                
                -
                
                
                -
                
                
                (555,622
                )**Balance
                    April 30, 1999**
                
                
                6,277,500
                
                
                6,278
                
                
                -
                
                
                -
                
                
                264,684
                
                
                -
                
                
                -
                
                
                (211,436
                )
                
                59,526Common
                    stock issued for cash
                
                
                600,000
                
                
                600
                
                
                -
                
                
                -
                
                
                299,400
                
                
                -
                
                
                -
                
                
                -
                
                
                300,000Common
                    stock issued for finder's fee
                
                
                50,000
                
                
                50
                
                
                -
                
                
                -
                
                
                24,950
                
                
                -
                
                
                -
                
                
                -
                
                
                25,000Treasury
                    stock
                
                
                -
                
                
                -
                
                
                (23,000
                )
                
                (23
                )
                
                (15,189
                )
                
                -
                
                
                -
                
                
                -
                
                
                (15,212
                )Share
                    issue costs
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                (25,000
                )
                
                -
                
                
                -
                
                
                -
                
                
                (25,000
                )Net
                    loss
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                (319,714
                )
                
                (319,714
                )**Balance,
                    April 30, 2000**
                
                
                6,927,500
                
                
                6,928
                
                
                (23,000
                )
                
                (23
                )
                
                548,845
                
                
                -
                
                
                -
                
                
                (531,150
                )
                
                24,600Common
                    stock issued forfinancial
                    services
                
                
                120,000
                
                
                120
                
                
                -
                
                
                -
                
                
                59,880
                
                
                -
                
                
                -
                
                
                -
                
                
                60,000other
                    comprehensive income
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                3,534
                
                
                
                
                
                3,534Net
                    loss
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                (136,856
                )
                
                (136,856
                )**Balance
                    April 30, 2001**
                
                
                7,047,500
                
                $
                7,048
                
                
                (23,000
                )
                $
                (23
                )
                $
                608,725
                
                $
                -
                
                $
                3,534
                
                $
                (668,006
                )
                $
                (48,722
                )
 See
        Notes to the Consolidated Financial
        Statements   F-5
  **CANWEST
        PETROLEUM CORPORATION**
 **(An
        Exploration Stage Company)**
 **Consolidated
        Statements of Stockholders' Equity (Deficiency)**
 **From
        April 3, 1998 (Inception) Through April 30, 2006**
 **(U.S.
        Dollars)**
 Common
                    Stock
                
                Treasury
                    Stock
                
                Additional
                    paid-
                
                Subscriptions
                
                Other
                    Comprehensive
                
                Deficit
                    Accumulated During the Exploration
                
                Total
                    Sockholders' EquityShares
                
                Par
                    Value
                
                Shares
                
                Par
                    Value
                
                in
                    Capital
                
                received
                
                Income
                
                Stage
                
                (Deficiency)
 **Balance,
                    April 30, 2001**
                
                
                7,047,500
                
                $
                7,048
                
                
                (23,000
                )
                $
                (23
                )
                $
                608,725
                
                $
                -
                
                $
                3,534
                
                $
                (668,006
                )
                $
                (48,722
                )Common
                    stock issued for cash
                
                
                987,000
                
                
                987
                
                
                -
                
                
                -
                
                
                220,113
                
                
                -
                
                
                -
                
                
                -
                
                
                221,100Subscriptions
                    received
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                112,500
                
                
                -
                
                
                -
                
                
                112,500Stock
                    option compensation expense
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                77,600
                
                
                -
                
                
                -
                
                
                -
                
                
                77,600Other
                    comprehensive income
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                256
                
                
                -
                
                
                256Common
                    stock deemed to be issued
                
                
                3,950,000
                
                
                3,950
                
                
                -
                
                
                -
                
                
                193,550
                
                
                -
                
                
                -
                
                
                -
                
                
                197,500Warrants
                    granted on purchase
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                50,000
                
                
                -
                
                
                -
                
                
                -
                
                
                50,000Net
                    loss
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                (352,708
                )
                
                (352,708
                )**Balance
                    April 30, 2002**
                
                
                11,984,500
                
                
                11,985
                
                
                (23,000
                )
                
                (23
                )
                
                1,149,988
                
                
                112,500
                
                
                3,790
                
                
                (1,020,714
                )
                
                257,526Common
                    stock issued for cashand
                    settlement of debt
                
                
                2,300,000
                
                
                2,300
                
                
                -
                
                
                -
                
                
                299,700
                
                
                -
                
                
                -
                
                
                -
                
                
                302,000Subscriptions
                    received
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                (112,500
                )
                
                -
                
                
                -
                
                
                (112,500
                )Stock
                    option compensation expense
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                76,124
                
                
                -
                
                
                -
                
                
                -
                
                
                76,124Other
                    comprehensive income (loss)
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                (79,340
                )
                
                -
                
                
                (79,340
                )Net
                    loss
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                (2,289,124
                )
                
                (2,289,124
                )**Balance,
                    April 30, 2003**
                
                
                14,284,500
                
                
                14,285
                
                
                (23,000
                )
                
                (23
                )
                
                1,525,812
                
                
                -
                
                
                (75,550
                )
                
                (3,309,838
                )
                
                (1,845,314
                )Common
                    stock issuedFor
                    settlement of debt
                
                
                1,037,638
                
                
                1,037
                
                
                -
                
                
                -
                
                
                102,727
                
                
                -
                
                
                -
                
                
                -
                
                
                103,764For
                    Cash
                
                
                3,750,000
                
                
                3,750
                
                
                -
                
                
                -
                
                
                529,950
                
                
                -
                
                
                -
                
                
                -
                
                
                533,700For
                    service
                
                
                1,620,100
                
                
                1,620
                
                
                -
                
                
                -
                
                
                207,320
                
                
                -
                
                
                -
                
                
                -
                
                
                208,940For
                    property
                
                
                92,600
                
                
                93
                
                
                -
                
                
                -
                
                
                36,021
                
                
                -
                
                
                -
                
                
                -
                
                
                36,114Stock
                    option compensation expenses
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                89,340
                
                
                -
                
                
                -
                
                
                -
                
                
                89,340Beneficial
                    conversion feature ofConvertible
                    debenture and warrants (note 17)
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                464,598
                
                
                -
                
                
                -
                
                
                -
                
                
                464,598Other
                    comprehensive income (loss)
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                (37,014
                )
                
                -
                
                
                (37,014
                )net
                    loss
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                (1,581,054
                )
                
                (1,581,054
                )**Balance,
                    April 30, 2004**
                
                
                20,784,838
                
                $
                20,785
                
                
                (23,000
                )
                $
                (23
                )
                $
                2,955,768
                
                $
                -
                
                $
                (112,564
                )
                $
                (4,890,892
                )
                $
                (2,026,926
                )
  See Notes to the Consolidated Financial
            Statements
  F-6
    **CANWEST
        PETROLEUM CORPORATION**
 **(An
        Exploration Stage Company)**
 **Consolidated
        Statements of Stockholders' Equity (Deficiency)**
 **From
        April 3, 1998 (Inception) Through April 30, 2006**
 **(U.S.
        Dollars)**
   Common
                  Stock
              
              Treasury
                  Stock
              
              Additional
                  paid-
              
              Subscriptions
              
              Other
                  Comprehensive
              
              Deficit
                  Accumulated During the Exploration
              
              Total
                  Sockholders' EquityShares
              
              Par
                  Value
              
              Shares
              
              Par
                  Value
              
              in
                  Capital
              
              received
              
              Income
              
              Stage
              
              (Deficiency)
 **Balance,
                  April 30, 2004**
              
              
              20,784,838
              
              $
              20,785
              
              
              (23,000
              )
              $
              (23
              )
              $
              2,955,768
              
              $
              -
              
              $
              (112,564
              )
              $
              (4,890,892
              )
              $
              (2,026,926
              )Common
                  stock issued for:Settlement
                  of debt
              
              
              16,607,161
              
              
              16,607
              
              
              -
              
              
              -
              
              
              3,752,292
              
              
              -
              
              
              -
              
              
              -
              
              
              3,768,899Cash
              
              
              3,801,972
              
              
              3,802
              
              
              -
              
              
              -
              
              
              998,555
              
              
              -
              
              
              -
              
              
              -
              
              
              1,002,357Services
              
              
              4,436,566
              
              
              4,437
              
              
              -
              
              
              -
              
              
              1,245,290
              
              
              -
              
              
              -
              
              
              -
              
              
              1,249,727Property
              
              
              12,778,124
              
              
              12,778
              
              
              -
              
              
              -
              
              
              2,855,441
              
              
              -
              
              
              -
              
              
              -
              
              
              2,868,219Stock
                  option compensation expense
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              68,552
              
              
              -
              
              
              -
              
              
              -
              
              
              68,552Beneficial
                  conversion feature ofconvertible
                  debentures and warrants
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              1,959,557
              
              
              -
              
              
              -
              
              
              -
              
              
              1,959,557Other
                  comprehensive income (loss)
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (53,270
              )
              
              -
              
              
              (53,270
              )Net
                  loss
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (5,109,073
              )
              
              (5,109,073
              )**Balance,
                  April 30, 2005**
              
              
              58,408,661
              
              
              58,409
              
              
              (23,000
              )
              
              (23
              )
              
              13,835,455
              
              
              -
              
              
              (165,834
              )
              
              (9,999,965
              )
              
              3,728,042Common
                  stock issued for:Cash
              
              
              24,512,052
              
              
              24,512
              
              
              -
              
              
              -
              
              
              28,888,364
              
              
              -
              
              
              -
              
              
              
              
              
              28,912,876Cashless
                  exercise of warrantsand
                  options
              
              
              10,971,013
              
              
              10,971
              
              
              -
              
              
              -
              
              
              (10,971
              )
              
              -
              
              
              -
              
              
              
              
              
              -Property
              
              
              385,880
              
              
              385
              
              
              -
              
              
              -
              
              
              500,059
              
              
              -
              
              
              -
              
              
              
              
              
              500,444Services
              
              
              11,746,945
              
              
              11,747
              
              
              -
              
              
              -
              
              
              9,298,262
              
              
              -
              
              
              -
              
              
              
              
              
              9,310,009Settlement
                  of debt
              
              
              9,021,857
              
              
              9,022
              
              
              -
              
              
              -
              
              
              5,449,975
              
              
              -
              
              
              -
              
              
              
              
              
              5,458,997Stock
                  option compensation expense
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              1,314,505
              
              
              -
              
              
              -
              
              
              
              
              
              1,314,505Beneficial
                  conversion feature of
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              -convertible
                  debenture and warrants
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              18,449,294
              
              
              -
              
              
              -
              
              
              
              
              
              18,449,294Other
                  comprehensive income
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              -Exchange
                  gain on translation
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              1,130,238
              
              
              
              
              
              1,130,238Net
                  loss
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (52,640,903
              )
              
              (52,640,903
              )**Balance,
                  April 30, 2006**
              
              
              115,046,408
              
              $
              115,046
              
              
              (23,000
              )
              $
              (23
              )
              $
              77,724,943
              
              $
              -
              
              $
              964,404
              
              $
              (62,640,868
              )
              $
              16,163,502
   See Notes to the Consolidated Financial
        Statements
  F-7
   **CANWEST
        PETROLEUM CORPORATION**
 **(Exploration
        Stage Company)**
 **Consolidated
        Statements of Cash Flows**
 **(U.S.
        Dollars)**
 
 **From
                  Inception on****April
                  3, 1998****Year
                  Ended April 30,**
              
              
              
              
              
              **Through
                  April 30,****2006**
              
              **2005**
              
              **2004**
              
              **2006****Operating
                  Activities**Net
                  loss
              
              $
              (52,640,903
              )
              $
              (5,109,073
              )
              $
              (1,581,054
              )
              $
              (62,640,868
              )Non
                  cash adjustments to net loss
              
              
              -Non-cash
                  financing expense
              
              
              34,047,988
              
              
              1,959,557
              
              
              464,598
              
              
              36,472,143Consulting
                  expenses satisfied by shares
              
              
              7,497,849
              
              
              1,161,060
              
              
              196,940
              
              
              8,915,849Exploration
                  costs acquired for shares
              
              
              352,686
              
              
              88,667
              
              
              -
              
              
              578,684Advertizing
                  and promotion for shares
              
              
              1,459,475
              
              
              -
              
              
              -
              
              
              1,459,475Recovery
                  of exploration expenses
              
              
              (936,469
              )
              
              -
              
              
              -
              
              
              (936,469
              )Equity
                  loss from investment
              
              
              -
              
              
              -
              
              
              -
              
              
              19,713Stock
                  option compensation expense
              
              
              1,314,505
              
              
              68,552
              
              
              89,340
              
              
              1,626,121Write-off
                  of exploration property
              
              
              -
              
              
              -
              
              
              -
              
              
              856,359Write
                  down of license
              
              
              -
              
              
              106,507
              
              
              -
              
              
              106,507Income
                  Tax Recovery
              
              
              (21,956
              )
              
              (39,385
              )
              
              -
              
              
              (61,341
              )Minority
                  Interest
              
              
              (2,876,685
              )
              
              (95,486
              )
              
              -
              
              
              (2,972,171
              )**Changes
                  In Non-Cash Working Capital**Accounts
                  receivable
              
              
              (488,154
              )
              
              (166,892
              )
              
              (14,168
              )
              
              (675,764
              )Accounts
                  payable
              
              
              273,235
              
              
              1,387,136
              
              
              107,638
              
              
              2,817,614**Cash
                  Used in Operating Activities**
              
              
              (12,018,429
              )
              
              (639,357
              )
              
              (736,706
              )
              
              (14,434,148
              )**Investing
                  Activities**Property
                  acquisition
              
              
              (9,843,580
              )
              
              (2,786,789
              )
              
              (82,341
              )
              
              (13,296,569
              )Other
                  Investments
              
              
              -
              
              
              (157,491
              )
              
              (259,308
              )
              
              (416,799
              )**Cash
                  Used in Investing Activities**
              
              
              (9,843,580
              )
              
              (2,944,280
              )
              
              (341,649
              )
              
              (13,713,368
              )**Financing
                  Activities**Issuance
                  of shares for cash
              
              
              28,885,876
              
              
              1,002,357
              
              
              533,700
              
              
              31,294,269Common
                  stock returned to treasury
              
              
              -
              
              
              -
              
              
              -
              
              
              (15,212
              )Convertible
                  debentures
              
              
              4,860,373
              
              
              2,503,748
              
              
              1,020,375
              
              
              8,384,496Advances
                  from (to) related parties
              
              
              (11,627
              )
              
              25,382
              
              
              (127,084
              )
              
              653,062Future
                  Income Taxes
              
              
              938,227
              
              
              181,979
              
              
              -
              
              
              1,120,206Shares
                  issued by subsidiary tonon-controlling
                  interest
              
              
              7,164,062
              
              
              543,710
              
              
              -
              
              
              7,707,772**Cash
                  Provided by Financing Activities**
              
              
              41,836,911
              
              
              4,257,176
              
              
              1,426,991
              
              
              49,144,593**Inflow
                  (Outflow) of Cash**
              
              
              19,974,902
              
              
              673,539
              
              
              348,636
              
              
              20,997,077**Effects
                  of exchange rate changes on cash**
              
              
              1,130,238
              
              
              -
              
              
              -
              
              
              1,130,238**Cash,
                  Beginning of Period**
              
              
              1,022,175
              
              
              348,636
              
              
              -
              
              
              -**Cash,
                  End of Period**
              
              $
              22,127,315
              
              $
              1,022,175
              
              $
              348,636
              
              $
              22,127,315Non-Cash
                  Financing ActivitiesCommon
                  stock issued for properties
              
              $
              500,444
              
              $
              2,868,219
              
              $
              36,114
              
              $
              3,837,442Warrants
                  granted on purchase of propertiesproperties
              
              $
              1,713,929
              
              $
              -
              
              $
              -
              
              $
              1,763,929Common
                  stock issued for services
              
              $
              8,856,496
              
              $
              1,249,727
              
              $
              196,940
              
              $
              10,388,163Common
                  stock issued for debt
              
              $
              5,939,510
              
              $
              3,768,899
              
              $
              -
              
              $
              9,708,409




See Notes to the Consolidated Financial
      Statements





F-8





**CANWEST
      PETROLEUM CORPORATION**


**(An
      Exploration Stage Company)**


**Notes
      to the Consolidated Financial Statements**


**(Stated
      in U.S. Dollars unless otherwise noted)**








**1.**
            **DESCRIPTION
                OF BUSINESS AND NATURE OF
                OPERATIONS**





CanWest
      Petroleum Corporation (“CanWest”) ****** together
      with its subsidiaries (collectively referred to as the “Company”) is in the
      exploration stage as defined in statement No. 7 of the Financial Accounting
      Standards Board. The principal business activity is the exploration and
      development of natural resource properties in Canada.








**2.**
            **SUMMARY
                OF SIGNIFICANT ACCOUNTING
                POLICIES**





These
      financial statements have been prepared in accordance with United States of
      America Generally Accepted Accounting Principles (“US GAAP”). The significant
      accounting polices used in these consolidated financial statements are as
      follows:





a)
      Principles of consolidation





These
      consolidated financial statements include the accounts of CanWest and all of
      its
      subsidiaries as follows:





-
            its
                wholly owned subsidiary, Anhydride Petroleum (USA), Inc. ("Anhydride
                USA")
                and Anhydride USA's wholly owned subsidiary Anhydride Petroleum (Canada)
                Inc. ("Anhydride Canada"), both acquired April 30, 2002, until October
                31,
                2005 when Anhydride Canada was sold to a third party for nominal
                cash
                proceeds. As a result of the disposal of Anhydride Canada the Company
                recorded a $736,782 recovery of exploration expenses pertaining to
                accounts payable of Anhydride
                Canada;





-
            Oilsands
                Quest Inc. (“OQI”) in which it held a 62.75% (2005 - 64.89%) interest
                (note 3 (a));





-
            Western
                Petrochemicals Corp. (“Western Petrochemicals”) in which it holds a 100%
                (2005 - 97.53%) interest (note 3 (b));
                and





-
            Township
                Petroleum Corporation (“Township”), in which it holds a 100% interest
                (note 3 (c)).





All
      inter-company transactions and balances have been eliminated.





b)
      Use of
      estimates





The
      preparation of financial statements in conformity with generally accepted
      accounting principles requires management to make estimates and assumptions
      that
      affect the reported amount of assets and liabilities and disclosures 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 may differ from those estimates.





F-9





**CANWEST
      PETROLEUM CORPORATION**


**(An
      Exploration Stage Company)**


**Notes
      to the Consolidated Financial Statements**


**(Stated
      in U.S. Dollars unless otherwise noted)**








**2.
      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)**





c)
      Foreign currency translation





The
      Company's operations and activities are conducted principally in Canada; hence
      the Canadian dollar is the functional currency which is translated into U.S.
      dollars for reporting purposes as follows:





(i)
            Monetary
                assets and liabilities at the rate of exchange in effect as at the
                balance
                sheet date;





(ii)
            Non-monetary
                assets and liabilities at the exchange rates prevailing at the time
                of the
                acquisition of the assets or assumption of the liabilities;
                and,





(iii)
            Revenues
                and expenditures at the average rate of exchange for the
                year.





Gains
      and
      losses arising from this translation of foreign currency are included in other
      comprehensive income (loss) as a separate component of stockholders' equity
      (deficiency).





d)
      Cash
      and Cash Equivalents.




Cash
      includes cash on deposit and Guaranteed Investments Certificates.





e)
      Properties and exploration stage expenditures:





Properties
      represents the capitalized costs of acquisition of natural resource properties
      principally, the right to explore for oil sands deposits in the provinces of
      Alberta and Saskatchewan, Canada and oil shale deposits in the province
      Saskatchewan, Canada.





All
      exploration costs incurred to the date of establishing that a property is
      economically recoverable are charged to operations.





f)
      Income
      taxes





Income
      taxes are calculated using the liability method of accounting. Temporary
      differences arising from the difference between the tax basis of an asset or
      liability and its carrying amount on the balance sheet are used to calculate
      deferred income tax liabilities or assets. These standards require that the
      deferred income tax asset and liabilities be measured using tax rates and laws
      that are expected to apply when the temporary differences are expected to
      reverse.







g)
      Stock-based compensation





Effective
      May 1, 2005, the Company applied the intrinsic value method of accounting as
      prescribed by APB Opinion No. 25 "Accounting for Stock Issued to Employees"
      and
      related interpretations, in accounting for options granted to employees. As
      such, compensation expense is recorded on the date of the grant when the market
      price of the underlying stock exceeds the exercise price. SFAS 123 "Accounting
      for Stock-based Compensation" establishes accounting and disclosure requirements
      using the fair value-based method of accounting for stock-based compensation
      plans. As allowed by SFAS 123, the Company elected to continue to apply the
      intrinsic value-based method of accounting described above and has adopted
      the
      disclosure requirements of SFAS 123, as amended by SFAS 148 effective May 1,
      2003.





F-10


**CANWEST
      PETROLEUM CORPORATION**


**(An
      Exploration Stage Company)**


**Notes
      to the Consolidated Financial Statements**


**(Stated
      in U.S. Dollars unless otherwise noted)**








**2.
      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)**








h)
      Financial Instruments




(i)
            Fair
                Value





The
      carrying value of cash, accounts receivable, exploration advances and deposits,
      accounts payable, convertible debentures and due to related parties approximate
      their fair value because of the short maturity of these financial
      instruments.





(ii)
            Interest
                rate risk





The
      Company is not exposed to significant interest rate risk due to the short-term
      maturity of its monetary current assets and current liabilities.




(iii)
            Translation
                  risk




The
      Company is exposed to foreign currency fluctuations to the extent expenditures
      incurred by the Company are not denominated in U.S. dollars.





i)
      Comprehensive loss





Comprehensive
      loss is comprised of net loss and other comprehensive income (loss) arising
      from
      foreign currency translation.





j)
      Loss
      per share





Loss
      per
      share calculations are based on the weighted average number of shares
      outstanding during the period. Diluted loss per share has not been presented
      separately as the outstanding warrants are anti-dilutive for each of the periods
      presented.





k)
      Recent
      accounting pronouncements





In
      December 2004, the FASB issued SFAS No. 123 (R), “Share-Based Payment”, which
      replaces SFAS No. 123, “Accounting for Stock-Based Compensation”. In March 2005,
      the Securities and Exchange Commission issued Staff Accounting Bulletin No.
      107
      - Share- Based Payment, which provides interpretive guidance related to SFAS
      No
      123 (R). SFAS No.123 (R) requires compensation costs related to share-based
      payment transactions to be recognized in the financial statements. With limited
      exceptions, the amount of compensation cost is measured based on the grant
      date
      fair value of the equity or liability instruments issued. SFAS No, 123 (R)
      requires liability awards to be re-measured each reporting period and
      compensation costs to be recognized over the period that an employee provides
      service in exchange for the award. Management plans to adopt this statement
      on
      the modified prospective basis beginning May 1, 2006, and does not expect
      adoption of this statement to have a material effect on the Company’s
      consolidated financial position and results of operations.





In
      October 2005, the FASB issued FASB Staff Position SFAS No. 123 (R)-2, “Practical
      Accommodation to Application of Grant Date as Defined in SFAS No. 123 (R)”. FSP
      123 (R) -2 provides guidance on the application of grant date as defined in
      SFAS
      No. 123 (R). In accordance with this standard a grant date of an award exists
      if
      (i) the award is a unilateral grant and (ii) the key terms and conditions of
      the
      award are expected to be communicated to an individual recipient within a
      relatively short time period from the date of approval. The Company will adopt
      this standard when it adopts SFAS No. 123 (R), and does not anticipate that
      the
      implementation of this statement will have a significant impact on its results
      of operations.




F-11


**CANWEST
      PETROLEUM CORPORATION**


**(An
      Exploration Stage Company)**


**Notes
      to the Consolidated Financial Statements**


**(Stated
      in U.S. Dollars unless otherwise noted)**








**2.
      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)**





k)
      Recent
      accounting pronouncements (continued)





In
      May
      2005, the FASB issued SFAS No.154 ,“Accounting Changes and Error Corrections”, a
      replacement of APB Opinion 20 and FASB Statement 3 **.** This
      Statement changes the requirements for the accounting for and reporting of
      a
      change in accounting principle and applies to all voluntary changes in
      accounting principle. It also applies to changes required by an accounting
      pronouncement in the unusual instance that the pronouncement does not include
      specific transition provisions. The Statement is effective for accounting
      changes made in fiscal years beginning after December 15, 2005. Management
      does
      not expect the adoption of this Statement to have a material effect on the
      Company’s consolidated financial position and results of
      operations.





In
      November 2005, the FASB concluded that in their proposed “Accounting for
      Uncertain Tax Positions - and Interpretation of FASB Statement No. 109” , a
      benefit recognition model with a two-step approach would be used, with a
      more-likely-than-not recognition criterion and a best estimate measure
      attribute. The first step is to evaluate the tax position for recognition be
      determining if the weight of available evidence indicates it is more likely
      than
      not, based solely on the technical merits, that the position will be sustained
      on audit, including resolution of related appeals or litigation processes,
      if
      any. The second step is to measure the appropriate amount of the benefit to
      recognize, which will be measured using the best estimate of the amount that
      will be sustained. The Tax position should be derecognized when it is no longer
      more likely than not of being sustained. In January 2006, the FASB concluded
      that the final Interpretation will be effective as of the beginning of the
      first
      annual period beginning after December 31, 2006. The Company is currently
      evaluating the implication of this Interpretation.





In
      February 2006, the FASB issued SFAS No. 155, “Accounting for Certain Hybrid
      Financial Instruments - an amendment of FASB Statements No. 133 and 140”. This
      Statement resolves issues addressed in Statement 133 Implementation Issue No.
      D1. “Application of Statement 133 to Beneficial Interests in Securitized
      Assets.” This Statement:





§
            Permits
                fair value re-measurement for any hybrid financial instrument that
                contains an embedded derivative that otherwise would require
                bifurcation;





§
            Clarifies
                which interest-only strips and principal-only strips are not subject
                to
                the requirements of Statement 133;





§
            Establishes
                a requirement to evaluate interests in securitized financial assets
                to
                identify interests that are freestanding derivatives or that are
                hybrid
                financing instruments that contain an embedded derivative requiring
                bifurcation;





§
            Clarifies
                that concentrations of credit risk in the form of subordination are
                not
                embedded derivatives; and





§
            Amends
                Statement 140 to eliminate the prohibition on a qualifying special-purpose
                entity from holding a derivative financial instrument that pertains
                to a
                beneficial interest other than another derivative financial
                instrument.





This
      statement is effective for all financial instruments acquired or issued after
      the beginning of fiscal years that begin after September 15, 2006. The Company
      is currently evaluating the implications of this Statement.


F-12





**CANWEST
      PETROLEUM CORPORATION**


**(An
      Exploration Stage Company)**


**Notes
      to the Consolidated Financial Statements**


**(Stated
      in U.S. Dollars unless otherwise noted)**





**3.
      BUSINESS COMBINATIONS**




a)  Oilsands
      Quest Inc. (“OQI”)




During
      the year ended April 30, 2005, CanWest acquired all of the issued and
      outstanding shares of OQI, a previously inactive Alberta, company. CanWest
      and
      OQI also entered into an agreement whereby OQI acquired a 49% interest in the
      OQI Exploration Permits (note 4(a)) from a third party for $769,125, the
      issuance of 50,000 common shares of CanWest and a 2.5% gross overriding royalty.
      CanWest had another agreement to purchase the remaining 51% interest in the
      OQI
      Exploration Permits through the indirect purchase of 100% of the issued and
      outstanding shares of a private Alberta, Canada company for $1,202,131, plus
      2
      million common shares of CanWest and the assumption of $0.11 per barrel in
      royalties. Pursuant to this agreement CanWest agreed to the issuance of 2
      million of its shares and assigned the agreement to OQI. During the year ended
      April 30, 2006, the acquisition of the remaining 51% interest in the OQI
      Exploration Permits was completed and the private Alberta, Canada, company
      was
      merged with OQI. OQI now holds a 100% interest in OQI Exploration Permits,
      subject to overriding royalties.




In
      order
      to secure management and financing for the OQI Exploration Permits OQI issued
      a
      number of its own securities, so that on April 30, 2006 CanWest held 62.75%
      (2005 - 64.89%) of the outstanding OQI common shares (note 10). Included in
      CanWest’s interest in OQI as at April 30, 2006 are 571,428 OQI common shares
      that were acquired as part of the purchase of 571,428 units from a third party,
      whereby each unit consisted of one OQI common share and one OQI share purchase
      warrant to purchase another common share. CanWest paid $4,932,482 for these
      units plus 1,500,000 share purchase warrants, whereby each warrant will allow
      the holder to acquire an additional CanWest common share for $2.00 until
      December 15, 2007. The $4,069,297 difference between the CanWest cost and the
      original issue price of these units by OQI and $1,713,929 in non cash financing
      expense related to the issuance of the warrants has been allocated to property
      costs.





CanWest
      has the right of first offer on future financings by OQI.








b)
      Western Petrochemicals Corp. (“Western Petrochemicals”)





On
      April
      21, 2005 CanWest issued 10,728,124 common shares for a 97.53% interest in
      Western Petrochemicals, which holds the permits to the Pasquia Hills, Oil Shale
      Project (note 4(b)). At the time the shares were issued Western Petrochemicals’
liabilities exceeded its assets by $926,200 and this along with $2,209,219
      for
      the common shares issued has been recorded as Pasquia Hill property acquisition
      costs. On April 6, 2006 CanWest completed the purchase of the remaining 2.47%
      of
      Western Petrochemicals through the issuance of 271,865 common shares and
      recorded a Pasquia Hills property acquisition cost of $375,174.





c)
      Township Petroleum Corporation (“Township”)





During
      year ended April 30, 2006 CanWest acquired all of the issued and outstanding
      shares of Township Petroleum Corporation, a previously inactive Alberta company.
      Subsequently Township acquired the lease to the Eagles Nest prospect (note
      4(c)).




F-13





**CANWEST
      PETROLEUM CORPORATION**


**(An
      Exploration Stage Company)**


**Notes
      to the Consolidated Financial Statements**


**(Stated
      in U.S. Dollars unless otherwise noted)**








**4.
      PROPERTIES**


OQI
              
              Pasquia
                  Hills,
              
              Eagles
                  Nest,Oil
                  Sands
              
              Oil
                  Shale
              
              Oil
                  SandsExploration
                  Permits
              
              Exploration
                  Permits
              
              Lease
              
              TotalBalance
                  April 30, 2004
              
              $
              -
              
              $
              118,455
              
              $
              -
              
              $
              118,455Acquisition
                  of property
              
              
              2,360,771
              
              
              3,294,237
              
              
              -
              
              
              5,655,008Balance
                  April 30, 2005
              
              
              2,360,771
              
              
              3,412,692
              
              
              -
              
              
              5,773,463Acquisition
                  of property
              
              
              10,763,539
              
              
              441,956
              
              
              852,459
              
              
              12,057,954Balance
                  April 30, 2006
              
              $
              13,124,310
              
              $
              3,854,648
              
              $
              852,459
              
              $
              17,831,417







a)
            OQI
                Oil Sands Exploration Permits





On
      September 29, 2004, OQI acquired a 49% interest in certain Oil Shale Exploration
      Permits (“the Permits”) in northwestern Saskatchewan near the Alberta border.
      The 49% interest in the permits was acquired from a third party for $769,125,
      the issuance of 50,000 CanWest common shares, with a deemed value of $19,000,
      and a 2.5% gross overriding royalty (the “2.5% GORR”). On May 3, 2005, OQI
      acquired the remaining 51% interest in the Permits for $1,202,131, 2 million
      CanWest common shares, with a deemed value of $640,000 and the assumption of
      $0.11 per barrel in royalties which maybe bought down to $0.04 per barrel at
      any
      time by paying $7,000,000.





The
      Permits are granted by the Province of Saskatchewan and provide for the right
      to
      explore and work the permit lands in the Province of Saskatchewan for a term
      of
      five years to May 31, 2009 or until a lease has been granted for their
      development. In accordance with the terms of the Permits, OQI relinquished
      40%
      of the total acreage covered by the Permits on May 31, 2005, and was required
      to
      relinquish another 40% of the remaining acreage by May 31, 2006. OQI has
      requested an extension of the 2006 relinquishment from the regulator and will
      undertake the relinquishment once the regulator makes a decision. As at April
      30, 2006, the Permits comprised an area of approximately 847,000 acres and
      following all relinquishments the Permits will comprise an area of approximately
      508,000 acres.





The
      Permits are subject to annual rental payments and certain levels of expenditures
      annually pursuant to the terms of the Permits and government regulations. The
      annual rentals are payable in advance as to $0.018 ($0.02 CDN) per acre for
      the
      current year and escalating to $0.089 ($0.10 CDN) per acre in the fifth year.
      The required exploration expenditures to hold the permits for the current year
      are $0.036 ($0.04 CDN) per acre and escalate to $0.089 ($0.10 CDN) per acre
      by
      the fifth year. As a result of OQI’s exploration activities it is in compliance
      with its exploration expenditure requirements.





Subsequent
      to April 30, 2006, Township paid $1,130,927 to the shareholders of a private
      Alberta company, whose only asset is the 2.5% GORR, to acquire an option to
      acquire all of the issued and outstanding shares of that company for an
      additional payment of $16,778,523 ($18,75000 CDN) on or before August 15, 2006.


F-14




**CANWEST
      PETROLEUM CORPORATION**


**(An
      Exploration Stage Company)**


**Notes
      to the Consolidated Financial Statements**


**(Stated
      in U.S. Dollars unless otherwise noted)**





**4.
      PROPERTIES (continued)**





b)
      Pasquia Hills, Oil Shale Exploration Permits





During
      the year ended April 30, 2004, CanWest acquired, from Western Petrochemicals,
      the right to acquire a 60% joint venture interest in the Pasquia Hills oil
      shale
      project, covering approximately 700,000 acres located in the Pasquia Hills
      area
      of Saskatchewan. CanWest also acquired the rights to a farm-in agreement on
      the
      Pasquia Hills land from a non-related company for 92,000 shares of common stock,
      with a cost of $36,114, and a cash payment of $29,923.





On
      April
      21, 2005 CanWest issued 10,728,124 common shares for a 97.53% interest in
      Western Petrochemicals. At the time the shares were issued. Western
      Petrochemicals liabilities exceeded its assets by $926,200 and this along with
      $2,209,219 for the common shares issued has been recorded as Pasquia Hill
      property acquisition costs. On April 6, 2006, CanWest completed the purchase
      of
      the remaining 2.47% of Western Petrochemicals through the issuance of 271,865
      common shares and recorded a Pasquia Hills property acquisition cost of
      $375,174.





Subsequent
      to April 30, 2006, a number of the non-core permits expired and have been
      returned to the Saskatchewan government. The remaining permits are scheduled
      to
      either expire and or be converted to lease during the next twelve
      months.




c)
      Eagles
      Nest, Oil Sands Lease





On
      June
      1, 2005, Township entered into an agreement with three third parties
      (collectively the Triple 7 Joint Venture) to post, acquire, develop and produce
      oil sands deposits located in the Athabasca Region of Alberta, Canada (the
      Triple 7 Joint Venture Agreement). As a result of this agreement, Township
      acquired one lease consisting of approximately 22,800 acres (the “Eagles Nest,
      Oil Sands Lease”) at a cost of $727,187. Pursuant to the terms of this agreement
      CanWest issued the Triple 7 Joint Venture 114,015 of its common shares with
      a
      deemed value of $127,432. Township has also agreed to pay the Triple 7 Joint
      Venture partners, as ongoing fees, $134,228 ($150,000 CDN) in cash or common
      shares of CanWest (at the discretion of the Company) on the first and second
      anniversary dates of the agreement. Shares issued under the agreement are
      subject to "piggyback" registration rights. On the third anniversary date of
      the
      agreement Township shall pay to the Triple 7 Joint Venture $402,685 ($450,000
      CDN) until such time as the lease is surrendered or a commercial project has
      been identified. In the event that Township receives a feasibility study,
      conducted by an independent third party, that indicates that a commercial
      project is economic and wishes to construct a commercial project, Township
      is
      required to notify the Triple 7 Joint Venture. Upon commencement of construction
      of such a commercial project Township shall pay to the Triple 7 Joint Venture
      the sum of $5,097,272 ($6,000,000 CDN). In addition to such payments Township
      has granted each of the three Triple 7 Joint Venture partners a royalty in
      the
      acquired leases of $0.27 ($0.03 CDN) on each barrel of crude bitumen produced,
      saved and sold or $382,295 ($450,000 CDN) per year, whichever is greater. Such
      royalty is governed by the royalty procedure, which stipulates, among other
      things, that the royalty will be secured by a lien, first charge or security
      interest on the royalty lands, and that the royalty is assignable or
      transferable subject to a right of first offer to Township.





To
      finance the acquisition of the project CanWest issued convertible debentures
      pursuant to which Township also granted royalties of $0.0073 CDN on each barrel
      of crude bitumen produced, saved and sold from the project. CanWest then bought
      back $0.0015 CDN of the royalties for 200,000 common shares at a deemed cost
      $80,000, which has been recorded as an exploration expense.





Pursuant
      to the terms of the lease Townships lease rental payments are $28,864 ($32,256
      CDN) per year.




F-15


**CANWEST
      PETROLEUM CORPORATION**


**(An
      Exploration Stage Company)**


**Notes
      to the Consolidated Financial Statements**


**(Stated
      in U.S. Dollars unless otherwise noted)**







**5.**  **INVESTMENT
      IN ENERGY 51 INC.**





Energy
      51
      is a privately held Alberta company engaged in the exploration and development
      of oil and gas primarily in Alberta. On April 7, 2004, CanWest entered into
      an
      equity participation and farmout agreement with Energy 51 Inc. (“Energy 51”).
      Pursuant to this agreement CanWest purchased 1,500,000 common shares of Energy
      51 for $310,291 and which represents approximately 1.8% (2005 - 25%) of Energy
      51’s issued and outstanding shares.





As
      part
      of this agreement CanWest also had the right to participate on all prospects
      generated by Energy 51 until April 1, 2006. During the year ended April 30,
      2005
      CanWest agreed to participate in the Sylvan Lake and Barrhead oil and gas
      prospects and included in exploration costs is $452,577 (2005 -$53,428) and
      $202,419 (2005 -$78,428) respectively.





**6.**  **OTHER
      INVESTMENTS**





a)
      Earth
      Energy License Agreement





On
      August
      12, 2003, CanWest became party to an exclusive license agreement for Canada,
      Central and South America with Earth Energy Resources Ltd. (“Earth
      Energy”).





During
      the year ended April 30, 2005 this license agreement was cancelled and replaced
      with a new agreement whereby CanWest is to receive 2.5% of gross revenue and
      12.5% of net profits from product sold and income earned (the “Royalty”) from
      products and processes related to certain patented chemical formulations
      utilized for applications related to the extraction of oil from surface mined
      tar sands, oil shale and soil reclamation (the “Catalyst”) in Canada. CanWest
      may also elect to receive a similar Royalty from Central and South America,
      subject to a payment of $500,000 that may be paid by way of offset and
      forfeiture of the first $500,000 in Royalties. Earth Energy has the right to
      name four entities and their affiliates upon which CanWest will only receive
      50%
      of the Royalty. CanWest also has the right to purchase the Catalyst, at cost,
      and equipment from Earth Energy, at cost plus 25%, for use on any properties
      that CanWest has a greater than 15% interest. As the present value of this
      agreement is currently undeterminable, the previously recorded license costs
      were written down by $106,507 and the licence was recorded as $1 as at April
      30,
      2005. The remaining balance of $1 was written off to exploration costs during
      the year ended April 30, 2006.







b)
      Henday
      Lake Property





By
      agreement dated April 13, 1998, CanWest acquired all of the assets of Athabasca
      Uranium Syndicate (a British Columbia, Canada syndicate) which consisted of
      cash, the Hocking Lake Property and Henday Lake Property. These properties
      were
      acquired in 1997 by the syndicate for $59,459 (CDN - $82,270) being the sellers'
      historical cost as the sellers were the controlling stockholders. Consideration
      given to the members of the syndicate was 6,000,000 common stock of CanWest
      at a
      par value of $0.001 each.





Pursuant
      to a letter of intent dated December 1, 2000 with one of its stockholders,
      CanWest transferred all its rights to the Henday Lake Property to a newly formed
      company, Uranium Holdings Corporation ("UHC"), a Nevada Corporation. During
      the
      year ended April 30, 2006, CanWest determined that this property is not in
      keeping with its core business and as such its investment of $815 has been
      written-off to exploration costs.


F-16





**CANWEST
      PETROLEUM CORPORATION**


**(An
      Exploration Stage Company)**


**Notes
      to the Consolidated Financial Statements**


**(Stated
      in U.S. Dollars unless otherwise noted)**





**6.**  **OTHER
      INVESTMENTS (continued)**




c)  Joint
      Ventures **





Sulfoxy
      Joint Venture





During
      the year ended April 30, 2005, CanWest entered into a joint venture agreement
      (the “Sulfoxy Joint Venture”) to fund research and development relating to the
      improvement of bitumen recovery from surface mineable oil sands ore and in-situ
      recovery of bitumen and heavy oils by oxidation and sulfonation of asphaltenes
      as to $183,642 ($205,220 CDN) to obtain a 60% interest. Upon earning a 60%
      interest in the joint venture CanWest may elect to purchase an additional 15%
      joint venture interest for $1,342,282 ($1,500,000 CDN). During the year ended
      April 30, 2006 CanWest incurred $126,341 (2005 - $0) in costs, which have been
      included in exploration costs, related to this joint venture.





NST
      Joint
      Venture





During
      the year ended April 30, 2006, CanWest has entered into a joint venture
      agreement (the “NST Joint Venture”) to fund research and development relating to
      non segregated tailing (‘NST”) production technology as to $402,684 ($450,000
      CDN) to obtain a 40% interest. During the year ended April 30, 2006 CanWest
      incurred $30,883 in costs, which have been included in exploration costs,
      related to this joint venture.




IVPT
      Joint Venture





During
      the year ended April 30, 2006, CanWest entered into a joint venture agreement
      (the “IVPT Joint Venture”) to fund research and development relating to inclined
      vibrating plate thickener (“IVPT”) technology as to a minimum of $447,427
      ($500,000 CDN) to obtain a 40% interest. During the year ended April 30, 2006
      CanWest incurred $77,209 in costs, which have been included in exploration
      costs, related to this joint venture.




CaO
      Joint
      Venture




During
      the year ended April 30, 2006, CanWest entered into a joint venture agreement
      (the “CaO Joint Venture”) to fund research and development relating to the CaO
      technology as to $178,971 ($200,000 CDN) to obtain a 50% interest. During the
      year ended April 30, 2006 CanWest incurred $0 in costs.




**7.
      ACCOUNTS PAYABLE**





Accounts
      payable at April 30 consists of the following:





Accounts
                  payable and accrued liabilities
              
              $
              2,311,583
              
              $
              2,029,734Penalty
                  share accrual (note 11(g))
              
              
              17,312,623
              
              
              -$
              19,624,206
              
              $
              2,029,734


F-17


**CANWEST
      PETROLEUM CORPORATION**


**(An
      Exploration Stage Company)**


**Notes
      to the Consolidated Financial Statements**


**(Stated
      in U.S. Dollars unless otherwise noted)**








**7.**  **ACCOUNTS
      PAYABLE (continued)**





Included
      in accounts payable and accrued liabilities as at April 30, 2005 were certain
      payables related to the Pasquia Hills Oil shale exploration permits which were
      settled for a gain of $199,687 during the year ended April 30, 2006. Accounts
      payable and accrued liabilities as at April 30, 2005 also included accounts
      payable of Anhydride Canada pertaining to its exploration programs which upon
      the disposition of Anhydride Canada resulted in a gain of $736,782.





**8.
      CONVERTIBLE DEBENTURES**








a)
            During
                the year ended April 30, 2004 CanWest issued $1,000,000 of 6% secured
                convertible debentures with a maturity date of June 1, 2004, which
                was
                subsequently extended. These debentures were secured by a general
                security
                agreement over all of CanWest’s property. The debentures are convertible
                into common shares at the lower of 70% of the five-day average closing
                price of CanWest’s common shares or $0.45 per share, provided that while
                the debentures are in good standing the conversion price will not
                be below
                $0.15 per share. This resulted in a non-cash financing expense to
                CanWest
                of $204,705, in 2004. CanWest also issued to the debenture holders
                2,666,666 warrants to purchase the same amount of common shares and
                included in non-cash financing expense in 2004 is $259,893 reflecting
                the
                beneficial conversion feature of the
                warrants.








b)
            During
                the year ended April 30, 2005 CanWest issued $1,500,000 of 6% secured
                convertible debentures with a maturity date of February 28, 2005,
                which
                was subsequently extended. These debentures were secured by a general
                security agreement over all of CanWest’s property. The debentures are
                convertible into common shares at the lower of 70% of the five-day
                average
                closing price of CanWest’s common shares or $0.45 per share, provided that
                while the debentures are in good standing the conversion price will
                not be
                below $0.15 per share. CanWest also issued to the debenture holders
                5,666,166 warrants to purchase the same amount of common shares.
                As a
                result of the issuance of these convertible debentures a non-cash
                financing expense of $1,211,421 was charged to operations in 2005.
                During
                the year ended April 30, 2005 this convertible debenture was converted
                into 11,827,668 common shares and no amount remained outstanding
                as at
                April 30, 2005.





c)
            During
                the year ended April 30, 2005 OQI issued $934,500 ($1,100,000 CDN)
                3%
                unsecured convertible debentures which matured as to $254,864 ($300,000
                CDN) on February 28, 2008, $84,955 ($100,000 CDN) on April 1, 2008
                and
                $594,682 ($700,000 CDN) on April 15, 2008. The debentures were convertible
                into common shares of OQI at a rate of $1.06 ($1.25 CDN) for one
                year
                following their issuance and then at $1.36 ($1.60 CDN) per share
                until
                maturity. In conjunction with this offering OQI also issued 343,750
                warrants to purchase that same number of common shares at a price
                of $1.36
                ($1.60 CDN) until the earlier of i) OQI being listed for trading
                on a
                recognized stock exchange or ii) the maturity date. As at April 30,
                2006
                the balance outstanding related to these convertible debentures was
                $0
                (2005 - $876,073).





d)
            On
                June 9, 2005 CanWest issued 7% convertible debentures for an aggregate
                principal amount of $2,000,000. Pursuant to this offering CanWest
                issued
                500,000, warrants to purchase that same number of common shares at
                $0.45
                until June 9, 2007, 5,000,000 warrants to purchase that same number
                of
                common shares at $0.55 per share until June 9, 2007 and 2,500,000
                warrants
                to purchase that same number of common shares at $1.50 until June
                9, 2007.
                In conjunction with this offering CanWest has paid $200,000 to consultants
                fees and recorded a non-cash financing expense of $1,561791. The
                balance
                outstanding pursuant to these convertible debentures as at April
                30, 2006
                was $0, as a result of the conversion of $2,426,318 of principal
                and
                interest into 4,043,864 common shares.






F-18


**CANWEST
      PETROLEUM CORPORATION**


**(An
      Exploration Stage Company)**


**Notes
      to the Consolidated Financial Statements**


**(Stated
      in U.S. Dollars unless otherwise noted)**





**8.**  **CONVERTIBLE
      DEBENTURES (continued)**





e)
            During
                August 2005, to finance the acquisition of the Eagles Nest Prospect
                CanWest entered intoa
                private placement of its securities whereby CanWest issued 8% convertible
                debentures with stock purchase warrants for an aggregate principal
                amount
                of $5,200,000 (the “Original Offering”). Under the terms of the Original
                Offering, the debentures are convertible to shares of CanWest’s common
                stock at$0.40
                per share. However, pursuant to the subscription agreement, amounts
                not
                expended on successful bids, associated costs and first year rentals
                are
                to be refunded on a pro-rata basis. The refunded amount totaled
                $4,472,813, as only $727,187 was used in connection with the acquisition
                of the Eagles Nest Oil Sands Lease and related costs. Under the terms
                of
                the Original Offering, the purchasers will also receive bonus shares
                equal
                to 10% of the refunded amount allocable to the respective purchasers,
                which bonus shares will be issued at the rate of $0.40 per share.
                Also,
                purchasers will receive warrants based on one warrant per $0.40 invested,
                after the refunded amount has been distributed to the purchaser.
                The
                warrants are exercisable for two years from the issue date at an
                exercise
                price of $0.55 per share.





Effective
      August 31, 2005, some of the purchasers elected not to receive their pro-rata
      portion of the refund amount. Rather, those purchasers elected to be included
      under amended terms to the Original Offering (the “Amended Offering”). Under the
      terms of the Amended Offering, a purchaser will receive a new convertible
      promissory note in the amount of their principal investment not refunded which
      is convertible into shares of CanWest’s common stock at a per share conversion
      price of $0.90 per share. The purchaser will also receive one warrant for each
      $0.90 of principal invested in the Amended Offering. Each warrant is exercisable
      to purchase one share of common stock at an exercise price of $1.30 per share
      for one year.





Of
      the
      total $5,200,000 raised in the Original Offering, $727,187 convertible notes
      were issued under the Original Offering along with 1,817,967 warrants to
      purchase that same number of common shares at $0.55 until September 19, 2007,
      $2,339,602 was refunded along with 584,878 common shares at a deemed cost of
      $233,951 which has been recorded as a non-cash financing expense ****** in
      2006,
      $2,133,186 convertible notes were issued pursuant to the Amended Offering along
      with 2,370,206 warrants to purchase that same number of common shares at $1.30
      until September 19, 2006 and 555,670 common shares were issued to consultants
      at
      a deemed cost of $222,268 which were included in consulting expenses in 2006.





In
      conjunction with the Original Offering and Amended Offering CanWest has recorded
      a non-cash financing expense of $1,719,100 in 2006.





The
      subscription agreements relating to the Original Offering and Amended Offering
      contain certain registration rights for the shares of common stock issuable
      upon
      conversion of the notes, the exercise of the underlying warrants, bonus shares
      issued and shares issued to consultants. CanWest failed to meet its registration
      right commitments on a timely basis and as such has accrued $315,151 in
      penalties. During the year ended April 30, 2006 CanWest issued 1,758,253 common
      shares pursuant to the Original Offering and 2,319,200 common shares pursuant
      to
      the Amended offering. As at April 30, 2006 $55,929, including accrued penalties,
      remained outstanding under the Original Offering which was satisfied by the
      issuance of 179,961 common shares subsequent to April 30, 2006 and $239,999,
      including accrued penalties, remained outstanding under the Amended Offering
      which was satisfied by the issuance of 249,051 common shares subsequent to
      April
      30, 2006.


F-19





**CANWEST
      PETROLEUM CORPORATION**


**(An
      Exploration Stage Company)**


**Notes
      to the Consolidated Financial Statements**


**(Stated
      in U.S. Dollars unless otherwise noted)**





**9.
      FUTURE INCOME TAXES**





As
      at
      April 30, 2006, CanWest has available a net operating loss carry forward of
      approximately $19,600,000 (2005 - $8,000,000) which it may use to offset future
      United States federal taxable income. The net operating loss carry forward,
      if
      not utilized, will begin to expire in 2017. A future tax
      asset approximating $7,640,000 (2005 - $3,120,000) stemming from temporary
      timing differences between the accounting and tax treatment of certain assets
      and liabilities, as well as from CanWest’s net operating loss carry forwards,
      has been reduced by a valuation allowance to $Nil due to uncertainties regarding
      the utilization of the deferred assets.





OQI
      has
      net operating losses of approximately $317,000 (2005 - $246,000). As at April
      30, 2006, OQI had a future tax liability related to differences between the
      accounting and tax values for certain assets. Such a liability stems from the
      renunciation of exploration expenditures to investors. The net effect of the
      future tax asset related to operating losses and future tax liability is a
      future tax liability of approximately $1,080,000 (2005 - $142,594), which has
      been recognized in these consolidated financial statements.





Western
      Petrochemicals has net operating losses of approximately $782,000 ****** (2005
      -
      $764,000) that may be applied against future taxable income generated in Canada
      which begin to expire in 2008. A future tax asset approximating $280,000 (2005
      -
      $272,000) stemming from Western Petrochemicals net operating loss carry
      forwards, has been reduced by a valuation allowance to $Nil due to uncertainties
      regarding the utilization of the future tax asset.





Certain
      of the tax related filings for the above noted companies have not yet been
      submitted to the appropriate tax authorities. The above noted tax amounts and
      balances are also subject to review and assessment by the tax authorities and
      any changes, which may occur as a result of such review or assessment by the
      tax
      authorities has not been reflected in these financial statements.





**10.
      NON CONTROLLING SHAREHOLDER INTEREST**





At
      April
      30, 2006 and 2005 there were non-controlling shareholder interests in OQI.
      These
      interest are comprised of the following:




2006
              
              2005Balance,
                  beginning of year
              
              $
              448,224
              
              $
              -Shares
                  issued to OQI Management
              
              
              -
              
              
              3,000Share
                  of net loss of OQI
              
              
              (2,876,685
              )
              
              (95,486
              )Increase
                  in interest arising from share issuances by OQI
              
              
              7,164,062
              
              
              540,710Balance,
                  end of year
              
              $
              4,735,601
              
              $
              448,224OQI
                  issued the following shares to management and third parties during
                  the
                  years 2005and
                  2006:Management
              
              
              3,000,000Private
                  placement including 352,500 flow-through shares
              
              
              787,500Balance
                  held by non-controlling interest April 30, 2005(representing
                  35.11% of total common shares outstanding)
              
              
              3,787,500Private
                  placements including 1,524,875 flow-through shares
              
              
              1,721,075Warrants
                  exercised
              
              
              549,450Conversion
                  of convertible note
              
              
              904,434Balance
                  held by non-controlling interest April 30, 2006(representing
                  37.25% of total common shares outstanding)
              
              
              6,962,459




In
      conjunction with OQI private placements the Company
      recorded a non-cash financing charge of $1,282,453 during the year ended April
      30, 2006.


F-20






**CANWEST
      PETROLEUM CORPORATION**


**(An
      Exploration Stage Company)**


**Notes
      to the Consolidated Financial Statements**


**(Stated
      in U.S. Dollars unless otherwise noted)**





**10.
      NON CONTROLLING SHAREHOLDER INTEREST (continued)**





Flow-Through
      common shares entitle the investor to claim deductions for Canadian income
      tax
      purposes for the exploration costs equal to the proceeds. A future income tax
      liability is recognized at the time of renunciation by the issuer with a
      corresponding charge to operations.





During
      2006 OQI issued 400,000 options to its directors to acquire that number of
      common shares at $5.11 ($6 CDN) for five years.





Activity
      in OQI common shares purchase warrants and agents options was as follows to
      April 30, 2006:




Number
              
              Weighted
                  Average Exercise Price (CDN)Issued
                  and outstandingApril
                  30, 2005
              
              
              5,875
              
              $
              2.00Issued
              
              
              3,331,016
              
              $
              4.95Exercised
              
              
              (1,120,878
              )
              $
              1.90Outstanding
                  April 30, 2006
              
              
              2,216,013
              
              $
              6.48




The
      following summarizes the OQI outstanding common share purchase warrants and
      agent options at April 30, 2006:




Exercise
                  Price (CDN)
              
              Number
                  Outstanding at April 30, 2006
              
              Weighted
                  Average Remaining Contractual
                Life$
                  1.60
              
              156,250
              
              1.88
                  years$
                  2.00
              
              
              809,763
              
              
              1.08
                  years$10.00
              
              
              1,250,000
              
              
              0.50
                  years2,216,013
              
              
              0.81
                  years


A
      summary
      of OQI stock options is as follows:


Number
              
              Weighted
                  Average Exercise Price (CDN)Granted
                  during 2005 andoutstanding
                  April 30, 2005
              
              
              300,000
              
              $
              0.50Granted
              
              
              500,000
              
              $
              5.40Cancelled
              
              
              (100,000
              )
              $
              0.50Outstanding
                  April 30, 2006
              
              
              700,000
              
              $
              4.00




The
      following table summaries information about OQI stock options outstanding at
      April 30, 2006:





Exercise
                  Price (CDN)
              
              Number
                  Outstanding at April 30, 2006
              
              Number
                  Exercisable at
                April
                  30, 2006
              
              Weighted
                  Average Remaining Contractual
                Life$0.50
              
              
              200,000
              
              
              200,000
              
              
              3.54
                  Years$3.00
              
              
              100,000
              
              
              -
              
              
              4.26
                  Years$6.00
              
              
              400,000
              
              
              200,000
              
              
              4.63
                  Years700,000
              
              
              400,000
              
              
              4.27
                  Years
 F-21





**CANWEST
      PETROLEUM CORPORATION**


**(An
      Exploration Stage Company)**


**Notes
      to the Consolidated Financial Statements**


**(Stated
      in U.S. Dollars unless otherwise noted)**





**11.
      CAPITAL** ** **STOCK**




a)
      Authorized common shares





During
      the year ended April 30, 2006 the authorized number of CanWest’s common shares
      was increased to 250,000,000 from 100,000,000.





b)
      Treasury stock





During
      the year ended April 30, 2000 CanWest purchased 23,000 shares of its common
      stock from the original owners who had acquired the shares prior to April 30,
      2000 in a private placement. The common stock was purchased for the same amount
      as the proceeds from original issue.





(c)
      Shares issued for services





During
      the year ended April 30, 2006 CanWest issued 2,000,000 common shares pursuant
      to
      an agreement for advertising and promotion, at a deemed cost of $860,000.
      CanWest also issued 3,200,000 common shares pursuant to consulting agreements,
      at a deemed cost of $6,080,000, whereby the shares are earned evenly over a
      six-month period ending May 2006. The deemed value of the contracted services
      not yet earned of $1,013,333 has been reflected in prepaid expenses. The Company
      also issued 584,878 bonus common shares, at a deemed cost of $233,951, pursuant
      to a convertible debt agreement that has been included in non-cash financing
      expenses. The Company issued 5,962,067 common shares pursuant to agreements
      with
      employees and consultants and has recorded related expenses as to $1,120,898
      in
      consulting, $352,686 in exploration which includes $233,333 related to the
      Anhydride Petroleum Limited Partnership, $27,000 in office, $36,000 in
      professional fees and $599,475 in advertising and promotion costs.





d)
      Settlement with Anhydride Canada Creditors




During
      the year ended April 30, 2004, in an attempt to settle outstanding liabilities
      of Anhydride Canada, CanWest made an offer to creditors to settle outstanding
      debts for shares of CanWest at a deemed price of $0.10 per share for every
      $0.15
      CDN of debt held. CanWest has received acceptances from creditors that
      represents 2,776,560 CanWest common shares. During the year ended April 30,
      2004
      CanWest issued 287,638 shares pursuant to these agreements and during the year
      ended April 30, 2005 it issued an additional 493,493 shares. During the year
      ended April 30, 2006 CanWest issued 33,529 common shares pursuant to these
      agreements.




e)
      Anhydride Petroleum Limited Partnership





Pursuant
      to an agreement between CanWest and Anhydride Petroleum Limited Partnership
      (the
“Limited Partnership”), CanWest agreed to acquire the interests of the Limited
      Partnership in a property, which Anhydride Canada had an interest in but was
      written off as of April 30, 2003, for 3,220,000 common shares of CanWest. During
      the year ended April 30, 2005, 886,666 of these shares were issued and charged
      to exploration at $0.10 per share. The balances of the shares were issued during
      the year ended April 30, 2006 and $233,333 was charged to exploration
      expense.


F-22




**CANWEST
      PETROLEUM CORPORATION**


**(An
      Exploration Stage Company)**


**Notes
      to the Consolidated Financial Statements**


**(Stated
      in U.S. Dollars unless otherwise noted)**








**11.**
            **CAPITAL******STOCK (continued)**





f)
      Debt
      Settlement





During
      the year ended April 30, 2005 CanWest also entered into three private placements
      whereby for the settlement of $476,500 of debt it issued 1,906,000 common shares
      and 1,586,508 warrants to purchase that same number of common shares at $0.35
      each until September 14, 2006. CanWest, also during the year ended April 30,
      2005 settled $595,000 in debt owed to related parties through the issuance
      of
      2,380,000 common shares and 2,380,000 warrants to purchase that same number
      of
      common shares at $0.34 per share until September 30, 2005.





During
      the year ended April 30, 2006 CanWest settled $366,000 of debt owed by Western
      Petrochemicals through the issuance of 850,000 common shares.





g)
      Private Placements of Common Shares





CanWest
      received $150,000 in share subscriptions pertaining to a private placement
      of
      1,500,000 shares at $0.10 per share of which 375,000 shares had been issued
      to
      April 30, 2002 for net subscriptions received at April 30, 2002 of $112,500.
      The
      balance of 1,125,000 shares were issued during the April 30, 2003 year-end.
      In
      addition, during the April 30, 2003 year-end, CanWest completed a private
      placement of 40,000 shares at $0.30 per share for total proceeds of $12,000
      and
      during the year ended April 30, 2004 it completed a private placement of 200,000
      shares for proceeds of $40,000.





During
      the year ended April 30, 2006 CanWest completed a private placement of
      15,268,000 units at $1.50 per unit whereby it issued 15,268,000 common shares
      and 7,634,000 warrants at $2.00 until December 12, 2007. Pursuant to this
      placement CanWest paid consultants $528,870 cash plus 260,580 warrants on
      similar terms as the issued warrants. In conjunction with this financing CanWest
      has also granted the investors and consultants certain registration rights
      whereby CanWest has undertaken to file a resale registration statement covering
      the shares and shares underlying the warrants within sixty days of closing,
      otherwise it shall pay a 2% penalty for each month and part of month that it
      is
      late in doing so. In addition, CanWest must respond to any queries to that
      resale registration statement within two weeks of receipt or else be subject
      to
      an additional penalty as to 2% for each two weeks thereafter. The penalties
      are
      payable, at the unit holders election, in either common shares or cash at $1.75
      per penalty share. Any penalty shares will also be qualified for resale by
      the
      same SB2 registration statement. To date CanWest has not filed the required
      SB2
      registration statement and estimates that the total number of penalty shares
      that will need to be issued will be 2,889,371 common shares at a deemed cost
      of
      $17,312,623, which is included in non cash financing expense as at April 30,
      2006.




i)
      Shareholders Rights Plan





As
      at
      March 9, 2006 CanWest adopted a shareholders right plan and reserved 250,000
      of
      its preferred shares for issuance pursuant to the exercise of the rights. The
      rights are designed to have certain anti-takeover effects and as such they
      will
      cause substantial dilution to a person or group that attempts to acquire CanWest
      without conditioning the offer on a substantial number of rights being acquired,
      or in a manner or on terms not approved by the board of directors of CanWest.
      The rights, however, should not deter any prospective offeror willing to
      negotiate in good faith with the board of directors, nor should the rights
      interfere with any merger or other business combination approved by the board
      of
      directors. To effect the shareholders rights plan CanWest declared a
      distribution of one right to each outstanding share of common stock, payable
      to
      shareholders of record on March 23, 2006. This right will be attached to the
      underlying common share and remain with the common share should the common
      share
      be sold or transferred.




F-23


**CANWEST
      PETROLEUM CORPORATION**


**(An
      Exploration Stage Company)**


**Notes
      to the Consolidated Financial Statements**


**(Stated
      in U.S. Dollars unless otherwise noted)**





**12.**  **STOCK
      OPTIONS**





CanWest
      has adopted stock option plans at various dates that were not adopted or
      ratified by shareholders, they may be granted at any price for a period of
      up to
      ten years as indicated below:


**PLAN**
              
              **NUMBER
                  AUTHORIZED**
              
              **GRANTED**
              
              **EXERCISED**
              
              **CANCELLED
                  / EXPIRED**
              
              **OUTSTANDING
                  APRIL 30, 2006**
              
              **EXERCISE
                  PRICE**2000
              
              
              1,050,000
              
              
              1,050,000
              
              
              1,050,000
              
              
              
              
              
              NIL
              
              $
              0.272002
              
              
              1,365,000
              
              
              1,365,000
              
              
              1,235,000
              
              (1)
              130,000
              
              
              NIL
              
              $
              0.12
                  -$0.362003
              
              
              2,500,000
              
              
              2,500,000
              
              
              2,500,000
              
              (2)
              NIL
              
              
              NIL
              
              $
              0.06
                  - $0.122003(b)
              
              
              2,500,000
              
              
              2,450,100
              
              
              2,450,100
              
              (3)
              NIL
              
              
              NIL
              
              $
              0.10
                  - $0.402003(c)
              
              
              2,000,000
              
              
              2,000,000
              
              
              2,000,000
              
              (4)
              NIL
              
              
              NIL
              
              $
              0.17
                  - $0.402004
              
              
              900,000
              
              
              900,000
              
              
              900,000
              
              (5)
              NIL
              
              
              NIL
              
              $
              0.31
                  - $0.372005
              
              
              2,000,000
              
              
              2,000,000
              
              
              2,000,000
              
              (6)
              NIL
              
              
              NIL
              
              $
              0.36
                  - $0.482005(b)
              
              
              2,500,000
              
              
              950,000
              
              
              550,000
              
              (7)
              NIL
              
              (8)
              400,000
              
              $
              1.50
                  - $2.002006
              
              
              2,500,000
              
              
              2,100,000
              
              
              50,000
              
              
              NIL
              
              (8)
              2,050,000
              
              $
              1.70
                  - $4.62
  (1)
                  Includes 225,000 issued to consultants for $81,000
                  bonus(2)
                  Includes 1,050,000 issued for services(3)
                  Includes 1,160,000 issued for services(4)
                  Includes 1,200,000 issued for services and 600,000 for $102,000
                  bonus(5)
                  Includes 900,000 issued for services(6)
                  Includes 2,000,000 issued for services and bonus to
                  consultants(7)
                  Exercised on a cashless basis(8)
                  See table below




The
      Company applies APB Opinion No. 25 and related interpretations in accounting
      for
      its stock options granted to employees and accordingly no stock based
      compensation expense has been recorded. Had compensation expense been determined
      as provided in SFAS 123 using the Black-Scholes option-pricing model, the
      pro-forma effect on the Company's net loss and per share amounts would have
      been
      as follows:





2006
              
              2005
              
              2004Net
                  loss, as reported
              
              $
              (55,372,244
              )
              $
              (5,109,073
              )
              $
              (1,581,054
              )Add:Stock-based
                  expense under thefair
                  value based method
              
              
              (4,545,322
              )
              
              (16,420
              )
              
              (127,886
              )Net
                  loss, pro-forma
              
              $
              (59,917,566
              )
              $
              (5,125,493
              )
              $
              (1,708,940
              )Net
                  los per share, as reprotedAdd:
              
              $
              (0.68
              )
              $
              (0.16
              )
              $
              (0.09
              )Stock-based
                  expense under thefair
                  value based method
              
              
              (0.05
              )
              
              -
              
              
              -Net
                  loss per share, pro-forma
              
              $
              (0.73
              )
              $
              (0.16
              )
              $
              (0.09
              )





F-24





**CANWEST
      PETROLEUM CORPORATION**


**(An
      Exploration Stage Company)**


**Notes
      to the Consolidated Financial Statements**


**(Stated
      in U.S. Dollars unless otherwise noted)**





**12.**
            **STOCK
                OPTIONS (continued)**





During
      the year ended April 30, 2006 2,005,000 (2005 - 2,899,900 / 2004 - 4,020,100)
      options were granted to consultants. These options were accounted for using
      the
      Black-Scholes option-pricing model, which resulted in a stock option
      compensation expense of $1,315,453 (2005 - $68,552; 2004 - $89,340) that has
      been included in consulting expenses.





The
      fair
      value of each option grant is calculated using the following weighted average
      assumption:


2006
              
              2005
              
              2004Expected
                  life in years
              
              
              2
              
              
              5
              
              
              1Interest
                  rate
              
              
              4.28
              %
              
              3.98
              %
              
              2.50
              %Volatility
              
              
              107.57
              %
              
              146.12
              %
              
              84.01
              %Dividend
                  yield
              
              
              0.00
              %
              
              0.00
              %
              
              0.00
              %




CanWest
      had outstanding options to purchase that same number of shares as
      follows:





Stock
                  option
              
              Exercise
              
              Number
                  of OptionsPlan
              
              Expiry
                  Date
              
              Price
              
              2006
              
              2005
              
              2004SOP
                  2003(c )
              
              
              15-Oct-04
              
              $
              0.17
              
              
              -
              
              
              -
              
              
              600,000SOP
                  2003(c )
              
              
              27-Jan-05
              
              $
              0.30
              
              
              -
              
              
              -
              
              
              100,000SOP
                  2002
              
              
              15-May-05
              
              $
              0.25
              
              
              -
              
              
              225,000
              
              
              455,000SOP
                  2003(c )
              
              
              2-Feb-06
              
              $
              0.30
              
              
              -
              
              
              100,000SOP
                  2000
              
              
              21-Aug-06
              
              $
              0.27
              
              
              -
              
              
              850,000
              
              
              1,050,000SOP
                  2005(b)
              
              
              20-Oct-07
              
              $
              1.50
              
              
              400,000
              
              
              -
              
              
              -SOP
                  2006
              
              
              1-Jan-07
              
              $
              1.70
              
              
              300,000
              
              
              -
              
              
              -SOP
                  2006
              
              
              1-Jan-08
              
              $
              2.00
              
              
              400,000
              
              
              -
              
              
              -SOP
                  2006
              
              
              11-Jan-08
              
              $
              2.58
              
              
              600,000
              
              
              -
              
              
              -SOP
                  2006
              
              
              8-Feb-08
              
              $
              4.62
              
              
              250,000
              
              
              -
              
              
              -SOP
                  2006
              
              
              17-Feb-09
              
              $
              4.57
              
              
              250,000
              
              
              -
              
              
              -SOP
                  2006
              
              
              9-Mar-08
              
              $
              4.60
              
              
              250,000
              
              
              -
              
              
              -2,450,000
              
              
              1,175,000
              
              
              2,205,000




Included
      in the number of options outstanding as at April 30, 2006 are 311,111 options
      at
      $2.00 with an expiry date of January 1, 2008 that vest evenly over the following
      fourteen months and 116,666 options at $1.70 with an expiry date of January
      1,
      2007 that vest evenly over the following two months. All other options are
      fully
      vested.





F-25





**CANWEST
      PETROLEUM CORPORATION**


**(An
      Exploration Stage Company)**


**Notes
      to the Consolidated Financial Statements**


**(Stated
      in U.S. Dollars unless otherwise noted)**





**13.**
            **STOCK
                OPTIONS (continued)**





The
      following table summarizes CanWest’s stock option activity for the years 2004
      through 2006:





Number
                  of Options
              
              Exercise
                  Price
              
              Weighted
                  Average Exercise PriceBalance,
                  April 30, 2003
              
              
              2,415,000
              
              $
              0.12
                  to $0.27
              
              $
              0.24Granted
                  during year
              
              
              6,050,100
              
              $
              0.06
                  to $0.45
              
              $
              0.14Cancelled
              
              
              (400,000
              )
              $
              0.25
              
              $
              0.25Exercised
              
              
              (5,760,100
              )
              $
              0.06
                  to $0.45
              
              $
              0.13Expired
              
              
              (100,000
              )
              $
              0.25
              
              $
              0.25Balance,
                  April 30, 2004
              
              
              2,205,000
              
              $
              0.17
                  to $0.27
              
              $
              0.24Granted
                  during year
              
              
              2,749,900
              
              $
              0.30
                  to $0.48
              
              $
              0.37Exercised
              
              
              (3,649,900
              )
              $
              0.17
                  to $0.48
              
              $
              0.33Expired
              
              
              (130,000
              )
              $
              0.25
                  to $0.30
              
              $
              0.29Balance,
                  April 30, 2005
              
              
              1,175,000
              
              $
              0.25
                  to $0.30
              
              $
              0.27Granted
                  during year
              
              
              4,875,000
              
              $
              0.36
                  to $4.60
              
              $
              1.76Exercised
              
              
              (3,375,000
              )
              $
              0.27
                  to $2.00
              
              $
              0.58Expired
              
              
              (225,000
              )
              $
              0.25
              
              $
              0.25Balance,
                  April 30, 2006
              
              
              2,450,000
              
              $
              1.50
                  to $4.62
              
              $
              2.82




**13.
      WARRANTS**





CanWest
      had the following warrants outstanding at April 30:


Expiry
              
              ExerciseDate
              
              Price
              
              2006
              
              2005
              
              20046-Jan-05
              
              $
              0.35
              
              
              -
              
              
              -
              
              
              2,666,66614-Sep-05
              
              $
              0.34
              
              
              -
              
              
              2,380,000
              
              
              -3-Nov-05
              
              $
              0.35
              
              
              -
              
              
              1,791,627
              
              
              -14-Sep-06
              
              $
              0.34
              
              
              2,380,000
              
              
              -
              
              
              -14-Sep-06
              
              $
              0.35
              
              
              -
              
              
              6,647,963
              
              
              -19-Sep-06
              
              $
              1.30
              
              
              1,022,630
              
              
              -
              
              
              -19-Sep-07
              
              $
              0.55
              
              
              568,111
              
              
              -
              
              
              -12-Dec-07
              
              $
              2.00
              
              
              7,894,580
              
              
              -
              
              
              -15-Dec-07
              
              $
              2.00
              
              
              1,500,000
              
              
              -
              
              
              -6-Feb-08
              
              $
              4.50
              
              
              200,000
              
              
              -
              
              
              -13,565,321
              
              
              10,819,590
              
              
              2,666,666








F-26




**CANWEST
      PETROLEUM CORPORATION**


**(An
      Exploration Stage Company)**


**Notes
      to the Consolidated Financial Statements**


**(Stated
      in U.S. Dollars unless otherwise noted)**








**13.
      WARRANTS (continued)**





During
      the year ended April 30, 2004, pursuant to the issuance of $1,000,000 6% secured
      convertible debentures, CanWest also issued 2,666,666 warrants. Each warrant
      entitled its holder to purchase an additional common share of CanWest during
      the
      period January 6, 2004 to January 6, 2005 at $0.35 per share. The holder of
      the
      warrants could elect a cashless exercise of the warrants based on the market
      value of CanWest’s common shares at the time of exercise. During the year ended
      April 30, 2005, as an inducement to have the holders exercise, CanWest agreed
      to
      reduce the exercise price on 2,222,222 of these warrants to $0.20 per share
      and
      they were exercised for cash. CanWest also agreed to issue an additional
      2,222,2222 warrants at $0.35 pre share and extend the expiry date on the
      remaining 444,444 warrants to November 3, 2005 and recorded a non-cash financing
      expense of $375,715 during the year ended April 30, 2006. Of these re-issued
      and
      lengthened expiry dated warrants 875,039 were exercised for cash. As at April
      30, 2005 1,791,627 of these warrants remained exercisable. During the year
      ended
      April 30, 2006 a total of 1,791,072 of these warrants were exercised, as to
      451,855 of the warrants for cash proceeds of $158,149 and 1,339,217 warrants
      were exercised pursuant to cashless exercise provisions, whereby CanWest issued
      841,454 common shares. A total of 555 of these warrants expired
      unexercised.





During
      the year ended April 30, 2005, pursuant to the issuance of secured $1,500,000
      6%
      convertible debentures **** (note
      8(b)) **** CanWest
      also issued 5,666,166 warrants. Each warrant entitled its holder to purchase
      an
      additional common share of CanWest at $0.35 until September 14, 2006. The holder
      of the warrants may elect a cashless exercise of the warrants based on the
      market value of CanWest’s common shares at the time of exercise. During the year
      ended April 30, 2005, 604,711 of these warrants were exercised for cash and
      5,061,455 remained outstanding at April 30, 2005. During the year ended April
      30, 2006 the remaining warrants were exercised as to 512,300 of the warrants
      for
      cash proceeds of $179,305 and 4,549,155 warrants were exercised pursuant to
      cashless exercise provisions, whereby CanWest issued 2,813,960 common shares.





Pursuant
      to three private placements during the year ended April 30, 2005, CanWest issued
      1,586,508 warrants to purchase that same number of common shares at $0.35 each
      until September 14, 2006. These warrants were exercised during the year ended
      April 30, 2006 pursuant to cashless exercise provisions, whereby CanWest issued
      1,474,782 common shares. Also during the year ended April 30, 2005, CanWest
      settled $595,000 in debt pursuant to which it issued 2,380,000 warrants to
      purchase that same number of common shares until September 14, 2005 which was
      extended to September 14, 2006 during the year ended April 30, 2006. In
      conjunction with the extension of these warrants the Company recorded a non-cash
      financing expense of $2,603,486.





Also
      during the year ended April 30, 2005 CanWest settled $595,000 in debt owed
      to
      related parties through the issuance of 2,380,000 common shares and 2,380,000
      warrants to purchase that same number of common shares at $0.34 per share until
      September 30, 2005 which was extended to September 30, 2006 during the year
      ended April 30, 2006.





CanWest,
      during the year ended April 30, 2006, issued as an inducement for early
      exercising of the warrants with expiry dates of November 3, 2005 and September
      14, 2006, 1,945,750 warrants to purchase that same number of common shares
      at
      $0.35 until April 30, 2006 and recorded a non-cash financing expense of
      $286,472. After the issuance all of these warrants were exercised for cash
      proceeds of $681,013




F-27





**CANWEST
      PETROLEUM CORPORATION**


**(An
      Exploration Stage Company)**


**Notes
      to the Consolidated Financial Statements**


**(Stated
      in U.S. Dollars unless otherwise noted)**





**13.**
            **WARRANTS
                (continued)**





In
      conjunction with the June 9, 2005 convertible debenture CanWest issued i)
      500,000 warrants to purchase that same number of common shares at $0.45 until
      June 9, 2007 of which 431,250 were exercised for cash and the balance issued
      on
      a cashless exercise basis whereby 68,750 common shares were issued, ii)
      5,000,000 warrants to purchase that same number of common shares at $0.55 per
      share until June 9, 2007 of which 2,625,000 were exercised for cash and the
      balance done on a cashless exercise basis whereby 2,216,685 common shares were
      issued and iii) 2,500,000 warrants to purchase that same number of common shares
      at $1.50 until June 9, 2007 of which 500,000 were exercised for cash and the
      balance done on a cashless exercise basis whereby 1,620,005 common shares were
      issued.





During
      the year ended April 30, 2006, in conjunction with the financing of the Eagles
      Nest Project CanWest issued 2,370,206 warrants to purchase that same number
      of
      common shares until September 19, 2006 at $1.30 per share and 1,817,967 warrants
      to purchase that same number of common shares until September 19, 2007 at $0.55
      per share. During the year ended April 30, 2006, 1,347,577 of the $1.30 warrants
      were exercised for cash and 1,249,845 of the $0.55 warrants were exercised
      for
      cash.





During
      December 2005, in conjunction with a private placement of 15,068,000 units
      at
      $1.50 per unit CanWest issued 7,894,580 warrants to purchase that same number
      of
      common shares at $2.00 per share until December 12, 2007 and recorded a non-cash
      financing expense of **** $9,632,116.





As
      part
      of CanWest’s December 2005 purchase of 571,428 OQI common shares and warrants
      from a third party for $4,932,482, CanWest issued 1,500,000 share purchase
      warrants whereby each warrant will allow the holder to purchase an additional
      common share at $2.00 until December 15, 2007 and recorded a non-cash financing
      expense of $1,713,929.





Also
      during the year ended April 30, 2006, CanWest issued a consultant a warrant
      to
      purchase 200,000 common shares at $4.50 per share until February 6, 2008 and
      recorded a non-cash financing expense of $667,360.





Subsequent
      to April 30, 2006, 242,974 of the September 19, 2007 $0.55 warrants were
      exercised for cash and 439,635 of the September 19, 2006 $1.30 warrants were
      exercised for cash.




**14.
      RELATED PARTY TRANSACTIONS**





The
      following non-arm's length transactions occurred with parties who are directors
      and stockholders of the Company.




(a)
            CanWest
                  acquired the assets of the Athabasca Uranium Syndicate (note 6(b)),
                  who
                  were related by significant influence, in exchange for 6,000,000
                  common
                  shares of CanWest.




(b)
            During
                  the year ended April 30, 2006, CanWest was charged management fees
                  of $0
                  (2005 - $72,000) by October Sun, a Nevada Corporation (“October Sun”) from
                  whom CanWest acquired Anhydride USA. October Sun was related to
                  CanWest by
                  way of significant influence. As of April 30, 2006, $58,062 (2004
                  -
                  $58,062) was owed to October Sun, without interest or stated terms
                  of
                  repayment. On September 14, 2004 October Sun converted $400,000
                  into
                  1,600,000 common shares and 1,600,000 warrants to purchase that
                  same
                  number of common shares at $0.34 per share until September 14,
                  2005.
                  During the year ended April 30, 2006 the expiry date on the warrants
                  was
                  extended to September 14, 2006.




F-28





**CANWEST
      PETROLEUM CORPORATION**


**(An
      Exploration Stage Company)**


**Notes
      to the Consolidated Financial Statements**


**(Stated
      in U.S. Dollars unless otherwise noted)**





**14.**
            **RELATED
                PARTY TRANSACTIONS
                (continued)**








(c)
            As
                at April 30, 2003 a total of $33,200 was due to an officer. During
                the
                year ended April 30, 2004 $30,000 of this amount was settled by the
                officer exercising an option to acquire 300,000 common shares. During
                the
                year ended April 30, 2004 this officer was paid management fees of
                $54,857, which included $30,000 paid by way of issuing him an additional
                300,000 common shares. As at April 30, 2004 no amounts were owed
                to this
                officer.





(d)
            The
                Company accrued fees of $3,271 in 2003 to a director and officer,
                included
                in advertising and promotion expenses, that were written off during
                2004.





(e)
            United
                Corporate Advisors ("UCA") is related to the Company by way of common
                directors. As of April 30, 2006 $0 (2005 - $11,627) was owed to UCA
                and
                included in due to related parties. On September 14, 2004 UCA converted
                $195,000 into 780,000 common shares and 780,000 warrants to purchase
                that
                same number of common shares at $0.34 per share until September 14,
                2005.
                During the year ended April 30, 2006 the expiry date on the warrants
                was
                extended to September 14, 2006. Also during the year ended April
                30, 2006
                UCA was paid consulting fees of
                $136,462.





(f)
            Included
                in consulting expenses for the year ended April 30, 2004 is $39,100
                pertaining to 230,000 shares issued to directors of the Company under
                the
                2003b Plan.





During
      the year ended April 30, 2005, pursuant to various Company stock option plans,
      directors of the company were issued 650,000 common shares and deemed proceeds
      of $151,000 were charged to consulting. Also included in consulting for the
      year
      ended April 30, 2005 is $4,611 paid to directors of the Company.





During
      the year ended April 30, 2006 the Company paid consulting fees of
      $43,389 ****** to
      a
      director of the Company. CanWest also issued directors 150,000 bonus shares
      at a
      deemed cost of $54,000 that was included in consulting expenses. Included in
      accounts payable and included in consulting expenses as at April 30, 2006 is
      $732,470 relating to 141,667 bonus shares issued to directors after April 30,
      2006.




(g)
            Also
                during the year ended April 30, 2006 a private company with a director
                in
                common received 1,000,000 common shares at a deemed cost of $1,900,000
                to
                provide consulting services to the Company for the six month period
                ending
                May 2006 and it also received consulting fees of $85,487 and a royalty
                on
                the Eagles Nest prospect of $0.0027969 per barrel.  (h)
              During
                    the year ended April 30, 2006 OQI paid its President and CEO
                    $148,091
                    (2005 - $39,963), Chief Financial Officer $148,091 (2005 - $39,963)
                    and
                    Vice President, of Exploration $91,676 (2005 - $0). All of these
                    officers
                    are paid pursuant to management agreements which contain change
                    of control
                    and termination clauses whereby OQI has agreed to pay the officers,
                    subject to certain conditions, an amount of up to one and one-half
                    times
                    their annual pay should they be terminated for reasons other
                    than cause or
                    certain triggering events occur.  (i)
                A
                      private company with directors in common was issued 2,000,000
                      common
                      shares of CanWest, at a deemed cost of $860,000, which has
                      been included
                      in advertising and promotion expense for the year ended April
                      30,
                      2006.
 F-29


**CANWEST
      PETROLEUM CORPORATION**


**(An
      Exploration Stage Company)**


**Notes
      to the Consolidated Financial Statements**


**(Stated
      in U.S. Dollars unless otherwise noted)**








**15.**
            **COMPREHENSIVE
                LOSS**





2006
              
              2005
              
              2004Net
                  Loss
              
              $
              (52,640,903
              )
              $
              (5,109,073
              )
              $
              (1,581,054
              )Other
                  comprehensive income (loss)
              
              
              1,130,238
              
              
              (53,270
              )
              
              (37,014
              )$
              (51,510,665
              )
              $
              (5,162,343
              )
              $
              (1,618,068
              )







**16.**
            **SUBSEQUENT
                  EVENTS**







a)
            On
                June 9, 2006, CanWest entered into an agreement with OQI that provided
                for
                the combination of the two companies. Under the terms of the agreement
                and
                subject to shareholder and regulatory approvals, each of the common
                shares
                of OQI not already owned by CanWest will be exchanged for 7.95
                exchangeable shares of OQI, subject to closing adjustments. Each
                exchangeable share may be exchanged for one common share of CanWest.
                Based
                on the number of OQI’s fully diluted shares CanWest estimates that it may
                be required to issue up to 74 million of its common shares should
                all of
                the OQI shares not controlled by CanWest be exchanged. In conjunction
                with
                closing of this agreement the Company has committed to paying $2,147,651
                ($2,400,000 CDN) in costs to third parties plus 35,000 OQI common
                shares.****





b)
            Also
                subsequent to April 30, 2006, CanWest completed a private placement
                of
                5,668,100 flow through common shares for gross proceeds of
                $33,684,009***.***These common shares have been issued on a flow through basis whereby
                the
                proceeds must be used for exploration in Canada and the tax benefits
                from
                that exploration will flow through to the subscribers. The agreement
                calls
                for CanWest to become a reporting issuer in Alberta Canada on or
                before
                September 3, 2006 and that should CanWest fail to do this that CanWest
                will issue an additional 566,810 flow though common shares. In conjunction
                with this financing CanWest has paid finders fees of******$1,852,659******and
                has entered into a subscription agreement with OQI whereby it has
                purchased 703,054 OQI flow through common shares for $33,684,048.





c)
            On
                May 1, 2006, CanWest entered into an executive employment agreement
                with
                its new chief executive officer whereby that officer received options
                under the 2006 stock option plan as to 4,000,000 common shares exercisable
                at $6.75 per share and vesting as to 1 million immediately, 1 million
                upon
                attaining certain reorganization goals of the Company related to
                OQI, 1
                million on May 1, 2007 and 1 million on May 1, 2008. CanWest also
                agreed
                to pay him a signing bonus of $135,123 ($151,000 CDN) and $268,456
                ($300,000 CDN) per year in salary. This agreement also contains
                termination clauses whereby CanWest has agreed to pay, subject to
                certain
                conditions, an amount equal to one and one half times his annual
                salary,
                benefits and bonuses and an acceleration of the vesting period of
                options
                outstanding should he be terminated for reasons other than cause
                or
                CanWest undergo a change in control.





d)
            In
                addition to the options noted above CanWest also issued 300,000 options
                at
                $6.00 until May 18, 2008 and 30,000 options at $6.00 until May 18,
                2009.
                Also after April 30, 2006 CanWest issued 205,334 bonus shares to
                its
                employees and officers. The deemed cost of these bonus shares being
                $1,061,680 has been included in accounts payable as at April 30,
                2006.





e)
            In
                support of an expanded drilling program on the OQI Exploration Permits
                OQI
                has committed to the purchase of a $3,579,418 ($4,000,000 CDN) portable
                residence camp facility.





f)
            OQI
                has entered into an office lease whereby its lease commitments will
                be
                $158,389 ($177,000 CDN) for the next two
                years.






F-30


**CANWEST
      PETROLEUM CORPORATION**


**(An
      Exploration Stage Company)**


**Notes
      to the Consolidated Financial Statements**


**(Stated
      in U.S. Dollars unless otherwise noted)**








**16.**
            **SUBSEQUENT
                EVENTS (continued)**





g)
            On
                May 1, 2006 OQI granted options to its employees and directors to
                allow
                them to acquire up to 1,230,000 OQI common shares for up to five
                years. Of
                these options 315,000 have an exercise price of $5.37 ($6.00 CDN)
                and are
                immediately vested; 215,000 have an exercise price of $22.37 ($25.00
                CDN)
                and vest immediately; 400,000 have an exercise price of $22.37 ($25.00
                CDN) and vest upon certain performance conditions being met; and
                300,000
                have an exercise price of $22.37 ($25.00 CDN) and vest as to one
                third on
                each of the first, second and third anniversaries of the date of
                grant.





h)
            Also
                effective May 1, 2006, the OQI Board of Directors increased the
                compensation paid to OQI’s President, Chief Financial Officer and Vice
                President of Exploration whereby they are now paid $268,456 ($300,000
                CDN), $223,714 ($250,000 CDN), and $223,714 ($250,000 CDN) per annum,
                respectively.




F-31