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| þ | Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934: For the quarterly period ended October 31, 2010 |
|--------|------------------------------------------------------------------------------------------------------------------------------------------|

| o | Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934: For the transition period from _______ to _________ |
|---|-----------------------------------------------------------------------------------------------------------------------------------------------|

| NEVADA                                                         |   | 98-0454144                        |
|----------------------------------------------------------------|--------|-----------------------------------|
| (State or other jurisdiction of incorporation or organization) |   | (IRS Employer Identification No.) |

| Large accelerated filer      o                 | Accelerated filer                        o |
|------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                         |                                                                                                                                                               |
| Non-accelerated filer         o | Smaller reporting company      þ                                                                                                |
| (Do not check if a smaller reporting company)                                |

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Table of Contents

| Part I. Financial Information                                                                          |
|--------------------------------------------------------------------------------------------------------|
|                                                                                                   |   |
| Item 1. Financial Statements                                                                           |   |
|                                                                                                   |   |
| Consolidated Balance Sheets (Unaudited) at October 31, 2010 and July 31, 2010                          | 4 |
|                                                                                                   |   |
| Consolidated Statements of Operations (Unaudited) for the three months ended October 31, 2010 and 2009 | 5 |
|                                                                                                   |   |
| Consolidated Statements of Cash Flows (Unaudited) for the three months ended October 31, 2010 and 2009 | 6 |
|                                                                                                   |   |
| Notes to Consolidated Financial Statements (Unaudited)                                                 | 8 |
|                                                                                                   |   |
| Item 2. Management’s Discussion and Analysis of Financial Condition and Results Of Operations    | 16 |
|                                                                                                   |   |
| Item 3. Quantitative and Qualitative Disclosures About Market Risk                                     | 20 |
|                                                                                                   |   |
| Item 4. Controls and Procedures                                                                        | 20 |
|                                                                                                   |   |
| Part II. Other Information                                                                             |
|                                                                                                   |   |
| Item 1. Legal Proceedings                                                                              | 21 |
|                                                                                                   |   |
| Item 1A. Risk Factors                                                                                  | 21 |
|                                                                                                   |   |
| Item 2. Unregistered Sales of Equity Securities and Use of Proceeds                                    | 21 |
|                                                                                                   |   |
| Item 3. Defaults Upon Senior Securities                                                                | 21 |
|                                                                                                   |   |
| Item 4. (Removed and Reserved)                                                                         | 21 |
|                                                                                                   |   |
| Item 5. Other Information                                                                              | 21 |
|                                                                                                   |   |
| Item 6. Exhibits                                                                                       | 21 |
|                                                                                                   |   |
| Signatures                                                                                             | 22 |

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STR

|                                                                                                                        |   | October 31, 2010(Restated) |        |   | July 31, 2010 |   |
|-----------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------|-------------|--------|--------------------|--------|
| Assets                                                                                                                      |   |                            |        |   |               |   |
| Current assets                                                                                                              |   |                            |        |   |               |   |
| Cash and cash equivalents                                                                                                   |   | $                               | 56,394      |   |               | $      | 247,851 |   |
| Restricted cash                                                                                                             |   |                            | 40,000      |   |               |   | 40,000 |   |
| Accounts receivable                                                                                                         |   |                            | 13,596      |   |               |   | 6,580 |   |
| Accounts receivable – related party                                                                                   |   |                            | 10,211      |   |               |   | 28,975 |   |
| Other current assets                                                                                                        |   |                            | —     |   |               |   | 251,328 |   |
| Total current assets                                                                                                        |   |                            | 120,201     |   |               |   | 574,734 |   |
|                                                                                                                        |   |                            |        |   |               |   |   |   |
| Oil and Gas Property, accounted for using the full cost method of accounting                                                |   |                            |        |   |               |   |   |   |
| Evaluated property, net of accumulated depletion of $287,988 and $265,872, respectively                                     |   |                            | 1,134,576   |   |               |   | 1,193,680 |   |
| Unevaluated property                                                                                                        |   |                            | 616,082     |   |               |   | 734,533 |   |
| Other Assets                                                                                                                |   |                            | 19,317      |   |               |   | 19,317 |   |
| Property and equipment, net of accumulated depreciation of $8,507 and $7,624, respectively                                  |   |                            | 4,864       |   |               |   | 5,747 |   |
|                                                                                                                        |   |                            |        |   |               |   |   |   |
| Total Assets                                                                                                                |   | $                               | 1,895,040   |   |               | $      | 2,528,011 |   |
|                                                                                                                        |   |                            |        |   |               |   |   |   |
| Liabilities and Stockholder’s Deficit                                                                                 |   |                            |        |   |               |   |   |   |
| Current liabilities                                                                                                         |   |                            |        |   |               |   |   |   |
| Accounts payable and accrued expenses                                                                                       |   | $                               | 470,190     |   |               | $      | 583,250 |   |
| Notes payable, net of unamortized discount of $0 and $45,436, respectively                                                  |   |                            | 100,000     |   |               |   | 104,564 |   |
| Derivative warrant liability                                                                                                |   |                            | 2,342,825   |   |               |   | 2,411,709 |   |
| Total current liabilities                                                                                                   |   |                            | 2,913,015   |   |               |   | 3,099,523 |   |
|                                                                                                                        |   |                            |        |   |               |   |   |   |
| Asset retirement obligations                                                                                                |   |                            | 47,885      |   |               |   | 57,623 |   |
| Total liabilities                                                                                                           |   |                            | 2,960,900   |   |               |   | 3,157,146 |   |
|                                                                                                                        |   |                            |        |   |               |   |   |   |
| Stockholder’s deficit:                                                                                                |   |                            |        |   |               |   |   |   |
| Common stock, $.001 par; 500,000,000 shares authorized shares; 53,594,152 and 52,432,486 shares issued and outstanding |   |                            | 53,594      |   |               |   | 52,432 |   |
| Additional paid in capital                                                                                                  |   |                            | 11,245,951  |   |               |   | 10,718,194 |   |
| Accumulated deficit                                                                                                         |   |                            | (12,365,405 | )      |               |   | (11,399,761 | ) |
| Total stockholder’s deficit                                                                                           |   |                            | (1,065,860  | )      |               |   | (629,135 | ) |
|                                                                                                                        |   |                            |        |   |               |   |   |   |
| Total liabilities and stockholder’s deficit                                                                           |   | $                               | 1,895,040   |   |               | $      | 2,528,011 |   |

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ST

|                                                    |   | Three months endedOctober 31, |       |
|---------------------------------------------------------|--------|------------------------------------|------------|
|                                                    |   | 2010(Restated)                     |       |   | 2009(Restated) |   |
|                                                    |   |                               |       |   |   |   |
| Revenues                                                |   | $                                  | 112,873    |   |   | $ | 82,933 |   |
|                                                    |   |                               |       |   |   |   |   |   |
| Operating expenses                                      |   |                               |       |   |   |   |   |   |
| Lease operating expense                                 |   |                               | 101,264    |   |   |   | 52,469 |   |
| Depreciation, depletion, and amortization               |   |                               | 23,000     |   |   |   | 16,050 |   |
| Accretion                                               |   |                               | 2,394      |   |   |   | — |   |
| Consulting fees                                         |   |                               | 528,135    |   |   |   | 309,063 |   |
| Management fees                                         |   |                               | 156,870    |   |   |   | 102,546 |   |
| Other general and administrative expense                |   |                               | 155,708    |   |   |   | 199,060 |   |
| Total operating expenses                                |   |                               | 967,371    |   |   |   | 679,188 |   |
|                                                    |   |                               |       |   |   |   |   |   |
| Loss from operations                                    |   |                               | (854,498   | ) |   |   | (596,255 | ) |
|                                                    |   |                               |       |   |   |   |   |   |
| Interest expense, net                                   |   |                               | (26,585    | ) |   |   | (70,068 | ) |
| Loss on warrant derivative liability                    |   |                               | (84,561    | ) |   |   | (2,038,226 | ) |
|                                                    |   |                               |       |   |   |   |   |   |
| Net Loss                                                |   | $                                  | (965,644   | ) |   | $ | (2,704,549 | ) |
|                                                    |   |                               |       |   |   |   |   |   |
| Basic and diluted loss per common share                 |   | $                                  | (0.02      | ) |   | $ | (0.08 | ) |
|                                                    |   |                               |       |   |   |   |   |   |
| Weighted average shares outstanding (basic and diluted) |   |                               | 53,215,312 |   |   |   | 31,984,844 |   |

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STR

|                                                                                |   | Three months ended October 31, |     |
|-------------------------------------------------------------------------------------|--------|------------------------------------------|----------|
|                                                                                |   | 2010(Restated)                           |     |   | 2009(Restated) |   |
| Cash Flows From Operating Activities                                                |   |                                     |     |   |   |   |
| Net loss                                                                            |   | $                                        | (965,644 | ) |   | $ | (2,704,549 | ) |
| Adjustments to reconcile net loss to net cash used in operating activities:         |   |                                     |     |   |   |   |   |   |
| Depreciation, depletion and amortization                                            |   |                                     | 23,000   |   |   |   | 16,050 |   |
| Accretion                                                                           |   |                                     | 2,394    |   |   |   | — |   |
| Amortization of debt discount                                                       |   |                                     | 20,578   |   |   |   | 52,100 |   |
| Common stock issued for services                                                    |   |                                     | 60,758   |   |   |   | — |   |
| Share based compensation-amortization of the fair value of  stock options |   |                                     | 114,617  |   |   |   | 152,182 |   |
| Loss on warrant derivative liability                                                |   |                                     | 84,561   |   |   |   | 2,038,226 |   |
| Gain on settlement of accounts payable                                              |   |                                     | —  |   |   |   | (4,195 | ) |
| Changes in operating assets and liabilities:                                        |   |                                     |     |   |   |   |   |   |
| Accounts receivable                                                                 |   |                                     | (7,016   | ) |   |   | 15,391 |   |
| Accounts payable and accrued expenses                                               |   |                                     | (113,062 | ) |   |   | (56,893 | ) |
| Other assets                                                                        |   |                                     | 251,328  |   |   |   | (75,000 | ) |
| Net cash used in operating activities                                               |   |                                     | (528,486 | ) |   |   | (566,688 | ) |
|                                                                                |   |                                     |     |   |   |   |   |   |
| Cash Flows From Investing Activities                                                |   |                                     |     |   |   |   |   |   |
| Purchases of oil and gas properties                                                 |   |                                     | (106,835 | ) |   |   | — |   |
| Purchases of fixed assets                                                           |   |                                     | —  |   |   |   | (1,293 | ) |
| Proceeds from sale of oil and gas properties and cost recovery                      |   |                                     | 275,000  |   |   |   | 1,857 |   |
| Net cash provided by investment activities                                          |   |                                     | 168,165  |   |   |   | 564 |   |
|                                                                                |   |                                     |     |   |   |   |   |   |
| Cash Flows From Financing Activities                                                |   |                                     |     |   |   |   |   |   |
| Proceeds from sales of common stock                                                 |   |                                     | 200,100  |   |   |   | 1,842,112 |   |
| Proceeds from notes payable                                                         |   |                                     | —  |   |   |   | 100,000 |   |
| Payments on notes payable                                                           |   |                                     | (50,000  | ) |   |   | — |   |
| Proceeds from notes payable to related parties                                      |   |                                     | —  |   |   |   | 100,500 |   |
| Payments on notes payable to related parties                                        |   |                                     | —  |   |   |   | (160,500 | ) |
| Other changed in due to (from) related parties                                      |   |                                     | 18,764   |   |   |   | (42,221 | ) |
| Net cash provided by financing activities                                           |   |                                     | 168,864  |   |   |   | 1,839,891 |   |
|                                                                                |   |                                     |     |   |   |   |   |   |
| Net increase (decrease) in cash                                                     |   |                                     | (191,457 | ) |   |   | 1,273,767 |   |
| Cash at beginning of period                                                         |   |                                     | 247,851  |   |   |   | 18,793 |   |
| Cash at end of period                                                               |   | $                                        | 56,394   |   |   | $ | 1,292,560 |   |

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|                                            |   | Three months ended October 31, |    |
|-------------------------------------------------|--------|------------------------------------------|---------|
|                                            |   | 2010(Restated)                           |    | 2009(Restated) |   |
| Supplemental Disclosures:                       |   |                                     |    |   |   |   |
| Interest paid in cash                           |   |                                     | — |   |   |   | — |   |
| Income taxes paid in cash                       |   |                                     | — |   |   |   | — |   |
|                                            |   |                                     |    |   |   |   |   |   |
| Non-cash investing and financing                |   |                                     |    |   |   |   |   |   |
| Non-cash capitalized interest                   |   | $                                        | 24,858  |   |   |   | — |   |
| Asset retirement obligation sold                |   |                                     | 12,132  |   |   |   | — |   |
| Stock for accounts payable                      |   |                                     | — |   |   | $ | 476,696 |   |
| Stock for prepaid consulting fees               |   |                                     | — |   |   |   | 43,278 |   |
| Debt discount                                   |   |                                     | — |   |   |   | 32,000 |   |
| Exercise of warrants classified as a derivative |   |                                     | 153,445 |   |   |   | — |   |

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STR

|                       |   | As reported |        |   | Adjustment |   |     | As restated |   |
|----------------------------|--------|-------------|-------------|--------|------------|--------|----------|-------------|--------|
| Additional paid-in capital |   | $           | 11,658,549  |   |       | $      | (412,598 | )           |   | $ | 11,245,951 |   |
| Accumulated deficit        |   |        | (12,778,003 | )      |       |   | 412,598  |        |   |   | (12,365,405 | ) |

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|                                    |   | As reported |       |   | Adjustment |   |     | As restated |   |
|-----------------------------------------|--------|-------------|------------|--------|------------|--------|----------|-------------|--------|
| Consulting fees                         |   | $           | 940,733    |   |       | $      | (412,598 | )           |   | $ | 528,135 |   |
| Total operating expenses                |   |        | 1,379,969  |   |       |   | (412,598 | )           |   |   | 967,371 |   |
| Loss from operations                    |   |        | (1,267,096 | )      |       |   | 412,598  |        |   |   | (854,498 | ) |
| Net Loss                                |   |        | (1,378,242 | )      |       |   | 412,598  |        |   |   | (965,644 | ) |
| Basic and diluted loss per common share |   | $           | (0.03      | )      |       | $      | 0.01     |        |   | $ | (0.02 | ) |

|                                                                                |   | As reported |       |   | Adjustment |   |     | As restated |   |
|-------------------------------------------------------------------------------------|--------|-------------|------------|--------|------------|--------|----------|-------------|--------|
| Net loss                                                                            |   | $           | (1,378,242 | )      |       | $      | 412,598  |        |   | $ | (965,644 | ) |
| Share based compensation-amortization of the fair value of  stock options |   | $           | 527,215    |   |       | $      | (412,598 | )           |   | $ | 114,617 |   |

|   | 1) | In October 2009, our private placements included warrants which had a “price protection” feature (i.e., an anti-dilution feature; a ratchet down feature).  As a result, the warrants are not considered indexed to our own stock, and as such, they are to be classified as liabilities and all future changes in the fair value of these warrants will be recognized currently in earnings in our consolidated statement of operations under the caption “Other Items – Gain (loss) on warrant derivative liability” until such time as the warrants are exercised or expire.  The previously filed financial statements reflected the warrants as indexed to our own stock and classified them as a component of equity. See Note 7: Warrant derivative liability for a detailed disclosure relating to these warrants. |
|--------|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 2) | In August 2009, we extended the term of warrants originally issued with an equity raise.  Because the warrants that were extended were originally issued with common stock, the fair values associated with this modification should have been recorded as a deemed dividend. The previously filed financial statements reflected the extension as interest and finance charges. |
|--------|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                             |   | As reported |       |   | Adjustment |   |       | As restated |   |
|----------------------------------|--------|-------------|------------|--------|------------|--------|------------|-------------|--------|
|                             |   |        |       |   |       |   |       |        |   |
| Warrant derivative liability     |   | $           | —    |   |       | $      | 4,390,338  |        |   | $ | 4,390,338 |   |
|                             |   |        |       |   |       |   |       |        |   |   |   |   |
| Total current liabilities        |   |        | 385,874    |   |       |   | 4,390,338  |        |   |   | 4,776,212 |   |
| TOTAL LIABILITIES                |   | $           | 408,727    |   |       | $      | 4,390,338  |        |   | $ | 4,799,065 |   |
|                             |   |        |       |   |       |   |       |        |   |   |   |   |
| Additional paid-in capital       |   | $           | 10,854,470 |   |       | $      | (2,713,189 | )           |   | $ | 8,141,281 |   |
| Accumulated deficit              |   |        | (8,597,677 | )      |       |   | (1,677,149 | )           |   |   | (10,274,826 | ) |
| TOTAL SHAREHOLDERS’ EQUITY |   | $           | 2,334,819  |   |       | $      | (4,390,338 | )           |   | $ | (2,055,519 | ) |

|                                 |   | As reported |       |   | Adjustment |   |       | As restated |   |
|--------------------------------------|--------|-------------|------------|--------|------------|--------|------------|-------------|--------|
| Interest and financing charges       |   | $           | 431,145    |   |       | $      | (361,077   | )           |   | $ | 70,068 |   |
| Loss on warrant derivative liability |   |        | —    |   |       |   | (2,038,226 | )           |   |   | (2,038,226 | ) |
| NET LOSS                             |   |        | (1,027,400 | )      |       |   | (1,677,149 | )           |   |   | (2,704,549 | ) |
| BASIC AND DILUTED LOSS PER SHARE     |   | $           | (0.03      | )      |       | $      | (0.05      | )           |   | $ | (0.08 | ) |

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|                                      |   | As reported |       |   | Adjustment |   |       | As restated |   |
|-------------------------------------------|--------|-------------|------------|--------|------------|--------|------------|-------------|--------|
|                                      |   |        |       |   |       |   |       |        |   |   |   |   |
| Net loss                                  |   | $           | (1,027,400 | )      |       | $      | (1,677,149 | )           |   | $ | (2,704,549 | ) |
| Non cash interest & financing charges |   | $           | 413,177    |   |       | $      | (361,077   | )           |   | $ | 52,100 |   |
| Loss on warrant liability                 |   | $           | —    |   |       | $      | 2,038,226  |        |   | $ | 2,038,226 |   |

|                       |   | October 31, 2010 |      |   | July 31, 2010 |   |
|----------------------------|--------|-----------------------|-----------|--------|--------------------|--------|
| Evaluated Properties       |   |                  |      |   |               |   |
| Costs subject to depletion |   | $                     | 1,422,564 |   |               | $      | 1,459,552 |   |
| Depletion                  |   |                  | (287,988  | )      |               |   | (265,872 | ) |
| Total evaluated properties |   |                  | 1,134,576 |   |               |   | 1,193,680 |   |
|                       |   |                  |      |   |               |   |   |   |
| Unevaluated properties     |   |                  | 616,082   |   |               |   | 734,533 |   |
|                       |   |                  |      |   |               |   |   |   |
| Net oil and gas properties |   | $                     | 1,750,658 |   |               | $      | 1,928,213 |   |

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|                                                           |   | October 31, 2010 |    |   | July 31, 2010 |   |
|----------------------------------------------------------------|--------|-----------------------|---------|--------|--------------------|--------|
| Liability for asset retirement obligation, beginning of period |   | $                     | 57,623  |   |               | $      | 22,662 |   |
| Additions                                                      |   |                  | — |   |               |   | 10,598 |   |
| Liabilities sold                                               |   |                  | (12,132 | )      |               |   | — |   |
| Revisions in estimated cash flows                              |   |                  | — |   |               |   | 731 |   |
| Accretion                                                      |   |                  | 2,394   |   |               |   | 23,632 |   |
| Liability for asset retirement obligation, end of period       |   | $                     | 47,885  |   |               | $      | 57,623 |   |

|   | ● | Level 1 inputs consist of unadjusted quoted prices for identical instruments in active markets. |
|--------|---------|------------------------------------------------------------------------------------------------------|

|   | ● | Level 2 inputs consist of quoted prices for similar instruments. |
|--------|---------|-----------------------------------------------------------------------|

|   | ● | Level 3 valuations are derived from inputs which are significant and unobservable and have the lowest priority. |
|--------|---------|----------------------------------------------------------------------------------------------------------------------|

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|                         |   | Fair Value Measurement at October 31, 2010   |      |
|------------------------------|--------|---------------------------------------------------|-----------|
|                         |   | Carrying Value at October 31, 2010 |      |   | Level 1 |   |   | Level 2 |   |   | Level 3 |   |
|                         |   |                                              |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Derivative warrant liability |   | $                                                 | 2,342,825 |   |   |   | — |   |   |   | — |   |   | $ | 2,342,825 |   |

| Beginning balance – August 1, 2010     |   | $      | 2,411,709 |   |
|----------------------------------------------|--------|--------|-----------|--------|
| Issuance of derivative warrants              |   |   | —   |   |
| Reduced for warrants exercised               |   |   | (153,445  | )      |
| Change in fair value of derivative liability |   |   | 84,561    |   |
| At October 31, 2010                          |   | $      | 2,342,825 |   |

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|   | ● | In August 2010, options to purchase 1,400,000 shares of common stock with an exercise price of $.20 per share and a term of three years were granted to one of our officers.  The fair value of the options on the date of grant was $173,611.  The options vest 25% each six months over the 18 months following the award with the first 25% or 350,000 shares vesting immediately. |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                      |   | 2010   |      |   | 2009   |   |
|-----------------------------------------------------------|--------|--------|-----------|--------|--------|--------|
| Number of options granted                                 |   |   | 1,400,000 |   |   |   | — |   |
| Compensation expense recognized                           |   | $      | 114,617   |   |   | $      | 76,800 |   |
| Compensation cost capitalized                             |   |   | —   |   |   |   | — |   |
| Weighted average fair value of options  granted |   | $      | 0.20      |   |   |   | — |   |

|                    |   | 2010          |   |   | 2009      |   |
|-------------------------|--------|---------------|--------|--------|-----------|--------|
| Risk-free interest rate |   |          | 1.27   | %      |      |   | 2.31 | % |
| Dividend yield          |   |          | 0      | %      |      |   | 0 | % |
| Volatility factor       |   |          | 153.00 | %      |      |   | 149.71 | % |
| Expected life (years)   |   | 1.5 - 2 years |   |   | 5.5 years |   |

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|                                    |   | Options |      |   | Weighted Average Share Price |   |    | Aggregate intrinsic value |   |   | Weighted average remaining contractual life (years) |   |
|-----------------------------------------|--------|---------|-----------|--------|------------------------------|--------|---------|---------------------------|--------|--------|-----------------------------------------------------|--------|
| Outstanding at year ended July 31, 2010 |   |    | 8,705,000 |   |                         | $      | 0.30    |                      |   | $      | 20,000                                              |   |   |   | 5.40 |   |
| Granted                                 |   |    | 1,400,000 |   |                         |   | 0.20    |                      |   |   |                                                |   |   |   |   |   |
| Exercised                               |   |    | —   |   |                         |   | — |                      |   |   |                                                |   |   |   |   |   |
| Expired                                 |   |    | (425,000  | )      |                         |   | 0.35    |                      |   |   |                                                |   |   |   |   |   |
| Outstanding at October 31, 2010         |   |    | 9,680,000 |   |                         | $      | 0.28    |                      |   | $      | 21,250                                              |   |   |   | 4.94 |   |

|                                    |   | Warrants |       |    | Weighted Average Share Price |   |    | Aggregate intrinsic value |   |   | Weighted average remaining contractual life (years) |   |
|-----------------------------------------|--------|----------|------------|---------|------------------------------|--------|---------|---------------------------|--------|--------|-----------------------------------------------------|--------|
| Outstanding at year ended July 31, 2010 |   |     | 23,599,067 |    |                         | $      | 0.42    |                      |   |   | —                                             |   |   |   | 3.02 |   |
| Granted                                 |   |     | —    |    |                         |   | — |                      |   |   | —                                             |   |   |   | — |   |
| Exercised                               |   |     | (870,000   | )  |                         |   | 0.23    |                      |   |   | —                                             |   |   |   | — |   |
| Expired                                 |   |     | (5,758,238 | )       |                         |   | 0.96    |                      |   |   | —                                             |   |   |   | — |   |
| Outstanding at October 31,2010          |   |     | 16,970,829 |    |                         | $      | 0.24    |                      |   |   | —                                             |   |   |   | 3.74 |   |

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|                            |   | Three Months ended October 31, |   |
|---------------------------------|--------|-------------------------------------|--------|
|                            |   | 2010                                |   |   | 2009 |   |
|                            |   | Oil (Bbls)                          |   |   | Gas (Mcf) |   |   | Total (Mcfe) |   |   | Oil (Bbls) |   |   | Gas (Mcf) |   |   | Total (Mcfe) |   |
| Production                      |   |                                | 1,381  |   |   |   | 2,871 |   |   |   | 11,159 |   |   |   | 1,113 |   |   |   | 3,043 |   |   |   | 9,722 |   |
| Average sales price             |   |                                | 73.80  |   |   |   | 3.81 |   |   |   | 10.11 |   |   |   | 67.04 |   |   |   | 2.73 |   |   |   | 8.53 |   |
| Average lease operating expense |   |                                |   |   |   |   |   |   |   |   | 9.00 |   |   |   |   |   |   |   |   |   |   |   | 5.40 |   |

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|                                      |   | Three Months Ended October 31, |     |   |            |   |       |                |   |
|-------------------------------------------|--------|-------------------------------------|----------|--------|-----------------|--------|------------|---------------------|--------|
|                                      |   | 2010 (Restated)                     |     |   | 2009 (Restated) |   |       | Increase/(Decrease) |   |   | %change |   |
| Revenues                                  |   | $                                   | 112,873  |   |            | $      | 82,933     |                |   |   | 29,940 |   |   |   | 36 | % |
|                                      |   |                                |     |   |            |   |       |                |   |   |   |   |   |   |   |   |
| Operating expenses                        |   |                                |     |   |            |   |       |                |   |   |   |   |   |   |   |   |
| Lease operating expense                   |   |                                | 101,264  |   |            |   | 52,469     |                |   |   | 48,795 |   |   |   | 93 | % |
| Depreciation, depletion, and amortization |   |                                | 23,000   |   |            |   | 16,050     |                |   |   | 6,950 |   |   |   | 43 | % |
| Accretion                                 |   |                                | 2,394    |   |            |   | —    |                |   |   | 2,394 |   |   |   | 100 | % |
| Consulting fees                           |   |                                | 528,135  |   |            |   | 309,063    |                |   |   | 219,072 |   |   |   | 71 | % |
| Management fees                           |   |                                | 156,870  |   |            |   | 102,546    |                |   |   | 54,324 |   |   |   | 53 | % |
| Other general and administrative expense  |   |                                | 155,708  |   |            |   | 199,060    |                |   |   | (43,352 | ) |   |   | (22 | %) |
| Total operating expenses                  |   |                                | 967,371  |   |            |   | 679,188    |                |   |   | 288,183 |   |   |   | 42 | % |
| Loss from operations                 |   |                                | (854,498 | )      |            |   | (596,255   | )                   |   |   | (258,243 | ) |   |   | 43 | % |
| Interest expense, net                     |   |                                | (26,585  | )      |            |   | (70,068    | )                   |   |   | (43,483 | ) |   |   | (62 | %) |
| Gain on warrant derivative liability      |   |                                | (84,561  | )      |            |   | (2,038,226 | )                   |   |   | (1,953,665 | ) |   |   | (96 | %) |
|                                      |   |                                |     |   |            |   |       |                |   |   |   |   |   |   |   |   |
| Net loss                                  |   | $                                   | (965,644 | )      |            | $      | (2,704,549 | )                   |   | $ | (1,738,905 | ) |   |   | (64 | %) |

|   | ● | Barge Canal: Revenue from the Barge Canal project was $67,501for the three months ended October 31, 2010, as compared to $47,184 for the three months ended October 31, 2009. This represents an increase of $20,317. This was primarily due to higher oil and gas prices. |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | Louisiana properties: Revenue from the properties located in Louisiana was $45,372 for the three months ended October 31, 2010 as compared to $34,743 for the comparable period in 2009. This represents an increase of $10,629.  This is due to increased production and higher oil prices.  During September 2010, we sold our working interest in the Dixon project and effective November 1, 2010, we sold our working interest in our remaining oil and gas properties in Louisiana.  We retained an overriding interest in the Holt and Strahan properties that were sold in November.  Accordingly, we will continue to have some revenue from our Louisiana properties; but the revenues will decline significantly in future periods. |
|--------|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | Barge Canal: Direct operating costs were $49,580 during the three months ended October 31, 2010 as compared to costs of $29,819 during the three months ended October 31, 2009. |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | ● | South Delhi/Big Creek Field: Direct operating costs were $42,358 during the three months ended October 31, 2010 as compared to costs of $21,904 during the three months ended October 31, 2009. |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|                      |   | October 31, 2010 |       |   | July 31, 2010 |   |
|---------------------------|--------|-----------------------|------------|--------|--------------------|--------|
|                      |
| Cash reserves             |   | $                     | 56,394     |   |               | $      | 247,851 |   |
|                      |   |                  |       |   |               |   |   |   |
| Working capital (deficit) |   | $                     | (2,792,814 | )      |               | $      | (2,524,789 | ) |

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Exhibit 31.1

Exhibit 31.2

Exhibit 32.1

Exhibit 32.2

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