----

----

| x | Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended October 31, 2009 |
|---|-----------------------------------------------------------------------------------------------------------------------------------------|

| o | Transition Report Pursuant to Section13 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 of organization) |   | (I.R.S. Employer Identification No.) |
|                                                           |   |                                 |
| Suite 2015, 600 Leopard Street, Corpus Christi, Texas          |   | 78473                                |
|                                                           |   |                                 |
| (Address of principal executive offices)                       |   | (Zip Code)                           |

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

----

----

----

|   | 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. See Note 10: Stockholders’ equity (deficit) – warrant modifications for more information. |
|--------|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

STRA

| PART I - FINANCIAL INFORMATION | 1        |
|--------------------------------|----------|
|                           |     |   |   |
|                           | Item 1.  | Financial Statements | 1 |
|                           |     |   |   |
|                           | Item 2.  | Management's Discussion and Analysis of Financial Condition and Results of Operations | 16 |
|                           |     |   |   |
|                           | Item 3.  | Quantitative and Qualitative Disclosures About Market Risk | 23 |
|                           |     |   |   |
|                           | Item 4.  | Controls and Procedures | 23 |
|                           |     |   |   |
| PART II - OTHER INFORMATION    | 24       |
|                           |     |   |   |
|                           | Item 1.  | Legal Proceedings | 24 |
|                           |     |   |   |
|                           | Item 1A. | Risk Factors | 24 |
|                           |     |   |   |
|                           | Item 2.  | Unregistered Sales of Equity Securities and Use of Proceeds | 24 |
|                           |     |   |   |
|                           | Item 3.  | Defaults Upon Senior Securities | 25 |
|                           |     |   |   |
|                           | Item 4.  | Submission of Matters to a Vote of Security Holders | 25 |
|                           |     |   |   |
|                           | Item 5.  | Other Information | 25 |
|                           |     |   |   |
|                           | Item 6.  | Exhibits | 25 |
|                           |     |   |   |
| SIGNATURES                     | 26       |

----

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PAR

1. 

----

Table of Contents

----

Table of Contents

|                                                                                                                               |   | October 31, 2009 |        |   |                    |   |
|------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------|-------------|--------|-------------------------|--------|
|                                                                                                                               |   | (Restated)                 |        |   | July 31, 2009 |   |
|                                                                                                                               |   |                       |        |   |                    |   |
| CURRENT ASSETS                                                                                                                     |   |                       |        |   |                    |   |
| Cash                                                                                                                               |   | $                          | 1,292,560   |   |                    | $      | 18,793 |   |
| Accounts receivable                                                                                                                |   |                       | 19,682      |   |                    |   | 35,073 |   |
| Prepaid expenses and deposits                                                                                                      |   |                       | 76,200      |   |                    |   | 44,478 |   |
|                                                                                                                               |   |                       |        |   |                    |   |   |   |
|                                                                                                                               |   |                       | 1,388,442   |   |                    |   | 98,344 |   |
|                                                                                                                               |   |                       |        |   |                    |   |   |   |
| RECLAMATION BONDS (Note 3)                                                                                                         |   |                       | 59,317      |   |                    |   | 59,317 |   |
| EQUIPMENT (Note 4)                                                                                                                 |   |                       | 27,802      |   |                    |   | 29,830 |   |
| OIL AND GAS PROPERTIES (Note 5)                                                                                                    |   |                       |        |   |                    |   |   |   |
| Proved properties                                                                                                                  |   |                       | 972,419     |   |                    |   | 986,926 |   |
| Unproved properties                                                                                                                |   |                       | 295,566     |   |                    |   | 295,454 |   |
|                                                                                                                               |   |                       |        |   |                    |   |   |   |
| TOTAL ASSETS                                                                                                                       |   | $                          | 2,743,546   |   |                    | $      | 1,469,871 |   |
|                                                                                                                               |   |                       |        |   |                    |   |   |   |
| CURRENT LIABILITIES                                                                                                                |   |                       |        |   |                    |   |   |   |
| Accounts payable and accrued liabilities                                                                                           |   | $                          | 148,420     |   |                    | $      | 403,804 |   |
| Convertible notes (Note 6)                                                                                                         |   |                       | 65,707      |   |                    |   | 42,718 |   |
| Notes payable (Note 6)                                                                                                             |   |                       | 97,111      |   |                    |   | - |   |
| Warrant derivative liability (Note 7)                                                                                              |   |                       | 4,390,338   |   |                    |   | - |   |
| Due to related parties (Note 8)                                                                                                    |   |                       | 74,636      |   |                    |   | 459,257 |   |
|                                                                                                                               |   |                       | 4,776,212   |   |                    |   | 905,779 |   |
|                                                                                                                               |   |                       |        |   |                    |   |   |   |
| ASSET RETIREMENT OBLIGATIONS (Note 9)                                                                                              |   |                       | 22,853      |   |                    |   | 22,662 |   |
| Total liabilities                                                                                                                  |   |                       | 4,799,065   |   |                    |   | 928,441 |   |
|                                                                                                                               |   |                       |        |   |                    |   |   |   |
| STOCKHOLDERS' EQUITY (DEFICIT)                                                                                                     |   |                       |        |   |                    |   |   |   |
| Capital stock (Note 10)                                                                                                            |   |                       |        |   |                    |   |   |   |
| Common stock $0.001 par value: 500,000,000 shares authorized 43,014,135 shares issued and outstanding (July 31, 2009 - 29,350,827) |   |                       | 43,014      |   |                    |   | 29,351 |   |
| Additional paid-in capital                                                                                                         |   |                       | 8,141,281   |   |                    |   | 7,688,912 |   |
| Obligation to issue shares                                                                                                         |   |                       | 17,000      |   |                    |   | 37,382 |   |
| Share subscriptions                                                                                                                |   |                       | 18,012      |   |                    |   | 356,062 |   |
| Deficit accumulated during the exploration stage                                                                                   |   |                       | (10,274,826 | )      |                    |   | (7,570,277 | ) |
| Total stockholders’ equity (deficit)                                                                                         |   |                       | (2,055,519  | )      |                    |   | 541,430 |   |
|                                                                                                                               |   |                       |        |   |                    |   |   |   |
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)                                                                         |   | $                          | 2,743,546   |   |                    | $      | 1,469,871 |   |

----

Table of Contents

|                                                                  |   | Three Months Ended October 31, 2009 (Restated) |        |   | Three Months Ended October 31, 2008 |   |       | For the Period from April 12, 2005 (inception) to October 31, 2009 (Restated) |   |
|-----------------------------------------------------------------------|--------|-----------------------------------------------------|-------------|--------|------------------------------------------|--------|------------|-----------------------------------------------------------------------------------------|--------|
|                                                                  |   |                                                |        |   |                                     |   |       |                                                                                    |   |
| OIL AND GAS REVENUES (Note 8)                                         |   | $                                                   | 82,933      |   |                                     | $      | 135,427    |                                                                                    |   | $ | 2,348,044 |   |
|                                                                  |   |                                                |        |   |                                     |   |       |                                                                                    |   |   |   |   |
| EXPENSES                                                              |   |                                                |        |   |                                     |   |       |                                                                                    |   |   |   |   |
| Consulting fees                                                       |   |                                                | 133,985     |   |                                     |   | 171,392    |                                                                                    |   |   | 2,129,417 |   |
| Consulting fees - stock based (Note 10)                               |   |                                                | 175,078     |   |                                     |   | 5,556      |                                                                                    |   |   | 1,746,483 |   |
| Depreciation and depletion                                            |   |                                                | 16,050      |   |                                     |   | 9,927      |                                                                                    |   |   | 227,517 |   |
| Direct operating costs (Note 8)                                       |   |                                                | 52,469      |   |                                     |   | 87,160     |                                                                                    |   |   | 1,762,457 |   |
| General and administrative                                            |   |                                                | 42,553      |   |                                     |   | 60,568     |                                                                                    |   |   | 463,395 |   |
| Impairment of properties (Note 5)                                     |   |                                                | -           |   |                                     |   | -          |                                                                                    |   |   | 233,306 |   |
| Interest and financing charges (Notes 6, 8 and 10)                    |   |                                                | 70,068      |   |                                     |   | -          |                                                                                    |   |   | 135,054 |   |
| Management fees (Note 8)                                              |   |                                                | 102,546     |   |                                     |   | 90,520     |                                                                                    |   |   | 1,149,871 |   |
| Management fees – stock based (Notes 8 and 10)                  |   |                                                | -           |   |                                     |   | -          |                                                                                    |   |   | 1,656,000 |   |
| Professional fees                                                     |   |                                                | 102,379     |   |                                     |   | 57,402     |                                                                                    |   |   | 718,028 |   |
| Travel and promotion                                                  |   |                                                | 24,907      |   |                                     |   | 13,024     |                                                                                    |   |   | 363,110 |   |
|                                                                  |   |                                                |        |   |                                     |   |       |                                                                                    |   |   |   |   |
| TOTAL EXPENSES                                                        |   |                                                | 720,035     |   |                                     |   | 495,549    |                                                                                    |   |   | 10,584,638 |   |
|                                                                  |   |                                                |        |   |                                     |   |       |                                                                                    |   |   |   |   |
| LOSS BEFORE OTHER ITEMS                                               |   |                                                | (637,102    | )      |                                     |   | (360,122   | )                                                                                       |   |   | (8,236,594 | ) |
|                                                                  |   |                                                |        |   |                                     |   |       |                                                                                    |   |   |   |   |
| OTHER ITEMS                                                           |   |                                                |        |   |                                     |   |       |                                                                                    |   |   |   |   |
| Gain on debt settlement                                               |   |                                                | 4,195       |   |                                     |   | -          |                                                                                    |   |   | 4,195 |   |
| Interest and other income                                             |   |                                                | 112         |   |                                     |   | -          |                                                                                    |   |   | 8,400 |   |
| Foreign exchange loss                                                 |   |                                                | (33,528     | )      |                                     |   | -          |                                                                                    |   |   | (12,601 | ) |
| Loss on warrant derivative liability (Note 7)                         |   |                                                | (2,038,226  | )      |                                     |   | -          |                                                                                    |   |   | (2,038,226 | ) |
|                                                                  |   |                                                |        |   |                                     |   |       |                                                                                    |   |   |   |   |
| NET LOSS FOR THE PERIOD                                               |   |                                                | (2,704,549  | )      |                                     |   | (360,122   | )                                                                                       |   |   | (10,274,826 | ) |
|                                                                  |   |                                                |        |   |                                     |   |       |                                                                                    |   |   |   |   |
| DEFICIT ACCUMULATED DURING THE EXPLORATION STAGE, BEGINNING OF PERIOD |   |                                                | (7,570,277  | )      |                                     |   | (4,787,774 | )                                                                                       |   |   | - |   |
|                                                                  |   |                                                |        |   |                                     |   |       |                                                                                    |   |   |   |   |
| DEFICIT ACCUMULATED DURING THE EXPLORATION STAGE, END OF PERIOD       |   | $                                                   | (10,274,826 | )      |                                     | $      | (5,147,896 | )                                                                                       |   | $ | (10,274,826 | ) |
|                                                                  |   |                                                |        |   |                                     |   |       |                                                                                    |   |   |   |   |
| NET LOSS PER SHARE, BASIC AND DILUTED                                 |   | $                                                   | (0.08       | )      |                                     | $      | (0.01      | )                                                                                       |   |   |   |   |
|                                                                  |   |                                                |        |   |                                     |   |       |                                                                                    |   |   |   |   |
| WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING, BASIC AND DILUTED      |   |                                                | 31,984,844  |   |                                     |   | 28,235,658 |                                                                                    |   |   |   |   |

----

Table of Contents

|                                                                     |   | Three Months Ended October 31, 2009(Restated) |       |   | Three Months Ended October 31, 2008 |   |     | For the Period From April 12, 2005 (inception) to October 31, 2009(Restated) |   |
|--------------------------------------------------------------------------|--------|----------------------------------------------------|------------|--------|------------------------------------------|--------|----------|----------------------------------------------------------------------------------------|--------|
|                                                                     |   |                                               |       |   |                                     |   |     |                                                                                   |   |
| CASH FLOWS FROM OPERATING ACTIVITIES                                     |   |                                               |       |   |                                     |   |     |                                                                                   |   |
| Net loss for the period                                                  |   | $                                                  | (2,704,549 | )      |                                     | $      | (360,122 | )                                                                                      |   | $ | (10,274,826 | ) |
|                                                                     |   |                                               |       |   |                                     |   |     |                                                                                   |   |   |   |   |
| Adjustments to reconcile net loss to net cash from operating activities: |   |                                               |       |   |                                     |   |     |                                                                                   |   |   |   |   |
| Depreciation and depletion                                               |   |                                               | 16,050     |   |                                     |   | 9,927    |                                                                                   |   |   | 227,517 |   |
| Impairment of oil and gas properties                                     |   |                                               | -          |   |                                     |   | -        |                                                                                   |   |   | 233,306 |   |
| Non-cash interest and financing charges                                  |   |                                               | 52,100     |   |                                     |   | -        |                                                                                   |   |   | 115,464 |   |
| Stock based compensation                                                 |   |                                               | 175,078    |   |                                     |   | 5,556    |                                                                                   |   |   | 3,402,483 |   |
| Loss on warrant derivative liability                                     |   |                                               | 2,038,226  |   |                                     |   | -        |                                                                                   |   |   | 2,038,226 |   |
| Gain on debt settlement                                                  |   |                                               | (4,195     | )      |                                     |   | -        |                                                                                   |   |   | (4,195 | ) |
| Write-off of reclamation bond                                            |   |                                               | -          |   |                                     |   | -        |                                                                                   |   |   | 21,875 |   |
| Changes in operating assets and liabilities:                             |   |                                               |       |   |                                     |   |     |                                                                                   |   |   |   |   |
| Accounts receivable                                                      |   |                                               | 15,391     |   |                                     |   | 178,396  |                                                                                   |   |   | (19,682 | ) |
| Prepaid expenses and deposits                                            |   |                                               | (75,000    | )      |                                     |   | (131,830 | )                                                                                      |   |   | (76,200 | ) |
| Accounts payable and accrued liabilities                                 |   |                                               | (79,789    | )      |                                     |   | (27,425  | )                                                                                      |   |   | 411,303 |   |
| NET CASH FLOWS USED IN OPERATING ACTIVITIES                              |   |                                               | (566,688   | )      |                                     |   | (325,498 | )                                                                                      |   |   | (3,924,729 | ) |
|                                                                     |   |                                               |       |   |                                     |   |     |                                                                                   |   |   |   |   |
| CASH FLOWS FROM FINANCING ACTIVITIES                                     |   |                                               |       |   |                                     |   |     |                                                                                   |   |   |   |   |
| Issuance of shares for cash, net of share issuance costs                 |   |                                               | 1,842,112  |   |                                     |   | 469,900  |                                                                                   |   |   | 6,411,309 |   |
| Proceeds from convertible notes                                          |   |                                               | -          |   |                                     |   | -        |                                                                                   |   |   | 150,000 |   |
| Proceeds from notes payable                                              |   |                                               | 100,000    |   |                                     |   | -        |                                                                                   |   |   | 100,000 |   |
| Advances and repayments to related parties                               |   |                                               | (102,221   | )      |                                     |   | (7,000   | )                                                                                      |   |   | 370,929 |   |
| NET CASH FLOWS PROVIDED BY FINANCING ACTIVITIES                          |   |                                               | 1,839,891  |   |                                     |   | 462,900  |                                                                                   |   |   | 7,032,238 |   |
|                                                                     |   |                                               |       |   |                                     |   |     |                                                                                   |   |   |   |   |
| CASH FLOWS FROM INVESTING ACTIVITIES                                     |   |                                               |       |   |                                     |   |     |                                                                                   |   |   |   |   |
| Acquisition of oil and gas properties, net of cost recoveries            |   |                                               | 1,857      |   |                                     |   | (24,951  | )                                                                                      |   |   | (1,667,268 | ) |
| Purchase of equipment                                                    |   |                                               | (1,293     | )      |                                     |   | -        |                                                                                   |   |   | (66,489 | ) |
| Reclamation bonds                                                        |   |                                               | -          |   |                                     |   | -        |                                                                                   |   |   | (81,192 | ) |
|                                                                     |   |                                               |       |   |                                     |   |     |                                                                                   |   |   |   |   |
| NET CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES                |   |                                               | 564        |   |                                     |   | (24,951  | )                                                                                      |   |   | (1,814,949 | ) |
|                                                                     |   |                                               |       |   |                                     |   |     |                                                                                   |   |   |   |   |
| INCREASE IN CASH                                                         |   |                                               | 1,273,767  |   |                                     |   | 112,451  |                                                                                   |   |   | 1,292,560 |   |
|                                                                     |   |                                               |       |   |                                     |   |     |                                                                                   |   |   |   |   |
| CASH, BEGINNING                                                          |   |                                               | 18,793     |   |                                     |   | 67,650   |                                                                                   |   |   | - |   |
|                                                                     |   |                                               |       |   |                                     |   |     |                                                                                   |   |   |   |   |
| CASH, ENDING                                                             |   | $                                                  | 1,292,560  |   |                                     | $      | 180,101  |                                                                                   |   | $ | 1,292,560 |   |

----

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|   | · | 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. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------|

----

Table of Contents

|                         |   | Carrying                           |      |   | Fair Value Measurement at October 31, 2009 |   |
|------------------------------|--------|------------------------------------|-----------|--------|--------------------------------------------|--------|
|                         |   | Value atOctober 31, 2009 |      |   | Level 1                                    |   |   | Level 2 |   |   | Level 3 |   |
|                         |   |                               |      |   |                                       |   |   |   |   |   |   |   |
| Derivative warrant liability |   | $                                  | 4,390,338 |   |                                       |   | _ |   |   |   | - |   |   | $ | 4,390,338 |   |

| Beginning balance – July 31, 2009      |   | $      | -         |   |
|----------------------------------------------|--------|--------|-----------|--------|
| Issuance of derivative warrants              |   |   | 2,352,112 |   |
| Reduced for warrants exercised               |   |   | -         |   |
| Change in fair value of derivative liability |   |   | 2,038,226 |   |
| At October 31, 2009                          |   | $      | 4,390,338 |   |
|                                         |   |   |      |   |

|   | 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. See Note 10: Stockholders’ equity (deficit) – warrant modifications for more information. |
|--------|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

Table of Contents

|                                 |   | 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 STOCKHOLDERS' EQUITY (DEFICIT) |   | $           | 2,334,819  |   |       | $      | (4,390,338 | )           |   | $ | (2,055,519 | ) |

|                                                            |   | As reported |       |   | Adjustment |   |       | As restated |   |
|-----------------------------------------------------------------|--------|-------------|------------|--------|------------|--------|------------|-------------|--------|
| Interest and financing charges                                  |   | $           | 431,145    |   |       | $      | (361,077   | )           |   | $ | 70,068 |   |
| Total expenses                                                  |   |        | 1,081,112  |   |       |   | (361,077   | )           |   |   | 720,035 |   |
| Loss before other items                                         |   |        | (998,179   | )      |       |   | 361,077    |        |   |   | (637,102 | ) |
| Loss on warrant derivative liability                            |   |        | -          |   |       |   | (2,038,226 | )           |   |   | (2,038,226 | ) |
| NET LOSS FOR THE PERIOD                                         |   |        | (1,027,400 | )      |       |   | (1,677,149 | )           |   |   | (2,704,549 | ) |
| DEFICIT ACCUMULATED DURING THE EXPLORATION STAGE, END OF PERIOD |   | $           | (8,597,677 | )      |       | $      | (1,677,149 | )           |   | $ | (10,274,826 | ) |
| BASIC AND DILUTED LOSS PER SHARE                                |   | $           | (0.03      | )      |       | $      | (0.05      | )           |   | $ | (0.08 | ) |

|                                 |   | As reported |       |   | Adjustment |   |       | As restated |   |
|--------------------------------------|--------|-------------|------------|--------|------------|--------|------------|-------------|--------|
| Interest and financing charges       |   | $           | 496,131    |   |       | $      | (361,077   | )           |   | $ | 135,054 |   |
| Total expenses                       |   |        | 10,945,715 |   |       |   | (361,077   | )           |   |   | 10,584,638 |   |
| Loss before other items              |   |        | (8,597,671 | )      |       |   | 361,077    |        |   |   | (8,236,594 | ) |
| Loss on warrant derivative liability |   |        | -          |   |       |   | (2,038,226 | )           |   |   | (2,038,226 | ) |
| NET LOSS FOR THE PERIOD              |   | $           | (8,597,677 | )      |       | $      | (1,677,149 | )           |   | $ | (10,274,826 | ) |

|                                      |   | 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 |   |

|                                     |   | As reported |       |   | Adjustment |   |       | As restated |   |
|------------------------------------------|--------|-------------|------------|--------|------------|--------|------------|-------------|--------|
|                                     |   |        |       |   |       |   |       |        |   |
| Net loss                                 |   | $           | (8,597,677 | )      |       | $      | (1,677,149 | )           |   | $ | (10,274,826 | ) |
| Non- cash interest and financing charges |   | $           | 476,541    |   |       | $      | (361,077   | )           |   | $ | 115,464 |   |
| Loss on warrant liability                |   | $           | -          |   |       | $      | 2,038,226  |        |   | $ | 2,038,226 |   |

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|                     |   | October 31, 2009 |    |   | July 31, 2009 |   |
|--------------------------|--------|----------------------------|---------|--------|-------------------------|--------|
|                     |   |                       |    |   |                    |   |
| EQUIPMENT                |   |                       |    |   |                    |   |
| Computer equipment       |   | $                          | 5,925   |   |                    | $      | 4,632 |   |
| Furniture and fixtures   |   |                       | 8,320   |   |                    |   | 8,320 |   |
| Leasehold improvements   |   |                       | 11,294  |   |                    |   | 11,294 |   |
| Production equipment     |   |                       | 40,950  |   |                    |   | 40,950 |   |
|                     |   |                       |    |   |                    |   |   |   |
|                     |   |                       | 66,489  |   |                    |   | 65,196 |   |
| Accumulated depreciation |   |                       | (38,687 | )      |                    |   | (35,366 | ) |
|                     |   |                       |    |   |                    |   |   |   |
|                     |   | $                          | 27,802  |   |                    | $      | 29,830 |   |

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Table of Contents

|                               |   | October 31, 2009 |      |   | July 31, 2009 |   |
|------------------------------------|--------|----------------------------|-----------|--------|-------------------------|--------|
|                               |   |                       |      |   |                    |   |
| PROVED PROPERTIES                  |   |                       |      |   |                    |   |
| Barge Canal                        |   | $                          | 593,843   |   |                    | $      | 593,767 |   |
| South Delhi / Big Creek Field      |   |                       | 346,902   |   |                    |   | 346,787 |   |
| Impaired properties                |   |                       | 220,504   |   |                    |   | 222,473 |   |
|                               |   |                       |      |   |                    |   |   |   |
|                               |   |                       | 1,161,249 |   |                    |   | 1,163,027 |   |
|                               |   |                       |      |   |                    |   |   |   |
| Accumulated depletion              |   |                       | (188,830  | )      |                    |   | (176,101 | ) |
|                               |   |                       |      |   |                    |   |   |   |
|                               |   |                       | 972,419   |   |                    |   | 986,926 |   |
|                               |   |                       |      |   |                    |   |   |   |
| UNPROVED OR UNEVALUATED PROPERTIES |   |                       |      |   |                    |   |   |   |
| Janssen Lease                      |   |                       | 20,000    |   |                    |   | 20,000 |   |
| Illinois prospects                 |   |                       | 164,816   |   |                    |   | 164,272 |   |
| Louisiana prospects                |   |                       | 22,944    |   |                    |   | 22,944 |   |
| Texas prospects                    |   |                       | 87,806    |   |                    |   | 88,238 |   |
|                               |   |                       |      |   |                    |   |   |   |
|                               |   |                       | 295,566   |   |                    |   | 295,454 |   |
|                               |   |                       |      |   |                    |   |   |   |
|                               |   | $                          | 1,267,985 |   |                    | $      | 1,282,380 |   |

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|                          |   | October 31, 2009 |      |   | July 31, 2009 |   |
|-------------------------------|--------|----------------------------|-----------|--------|-------------------------|--------|
|                          |   |                       |      |   |                    |   |
| ACQUISITION COSTS             |   |                       |      |   |                    |   |
| Barge Canal                   |   | $                          | 572,456   |   |                    | $      | 572,456 |   |
| Janssen Lease                 |   |                       | 20,000    |   |                    |   | 20,000 |   |
| South Delhi / Big Creek Field |   |                       | 290,290   |   |                    |   | 290,290 |   |
| Illinois prospects            |   |                       | 164,816   |   |                    |   | 164,272 |   |
| Louisiana Prospects           |   |                       | 22,944    |   |                    |   | 22,944 |   |
| Texas Prospects               |   |                       | 87,806    |   |                    |   | 88,238 |   |
| Impaired acquisition costs    |   |                       | 99,817    |   |                    |   | 101,786 |   |
|                          |   |                       |      |   |                    |   |   |   |
|                          |   |                       | 1,258,129 |   |                    |   | 1,259,986 |   |
|                          |   |                       |      |   |                    |   |   |   |
| DEVELOPMENT COSTS             |   |                       |      |   |                    |   |   |   |
| Barge Canal                   |   |                       | 12,246    |   |                    |   | 12,246 |   |
| South Delhi / Big Creek Field |   |                       | 42,900    |   |                    |   | 42,900 |   |
|                          |   |                       |      |   |                    |   |   |   |
|                          |   |                       | 55,146    |   |                    |   | 55,146 |   |
|                          |   |                       |      |   |                    |   |   |   |
| EXPLORATION COSTS             |   |                       |      |   |                    |   |   |   |
| Impaired exploration costs    |   |                       | 120,687   |   |                    |   | 120,687 |   |
|                          |   |                       |      |   |                    |   |   |   |
| RETIREMENT OBLIGATIONS        |   |                       |      |   |                    |   |   |   |
| Barge Canal                   |   |                       | 9,141     |   |                    |   | 9,065 |   |
| South Delhi / Big Creek Field |   |                       | 13,712    |   |                    |   | 13,597 |   |
|                          |   |                       |      |   |                    |   |   |   |
|                          |   |                       | 22,853    |   |                    |   | 22,662 |   |
|                          |   |                       |      |   |                    |   |   |   |
|                          |   | $                          | 1,456,815 |   |                    | $      | 1,458,481 |   |

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| Beginning balance – July 31, 2009      |   | $      | -         |   |
|----------------------------------------------|--------|--------|-----------|--------|
| Issuance of derivative warrants              |   |   | 2,352,112 |   |
| Reduced for warrants exercised               |   |   | -         |   |
| Change in fair value of derivative liability |   |   | 2,038,226 |   |
| At October 31, 2009                          |   | $      | 4,390,338 |   |
|                                         |   |   |      |   |

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|                          |   | October 31, 2009 |   |   | July 31, 2009 |   |
|-------------------------------|--------|----------------------------|--------|--------|-------------------------|--------|
|                          |   |                       |   |   |                    |   |
| BARGE CANAL                   |   |                       |   |   |                    |   |
| Opening balance               |   | $                          | 9,065  |   |                    | $      | 10,722 |   |
| Revisions                     |   |                       | -      |   |                    |   | (1,956 | ) |
| Accretion expense             |   |                       | 76     |   |                    |   | 299 |   |
|                          |   |                       |   |   |                    |   |   |   |
|                          |   |                       | 9,141  |   |                    |   | 9,065 |   |
|                          |   |                       |   |   |                    |   |   |   |
| SOUTH DELHI / BIG CREEK FIELD |   |                       |   |   |                    |   |   |   |
| Opening balance               |   |                       | 13,597 |   |                    |   | 4,643 |   |
| Revisions                     |   |                       | -      |   |                    |   | 8,505 |   |
| Accretion expense             |   |                       | 115    |   |                    |   | 449 |   |
|                          |   |                       |   |   |                    |   |   |   |
|                          |   |                       | 13,712 |   |                    |   | 13,597 |   |
|                          |   |                       |   |   |                    |   |   |   |
|                          |   | $                          | 22,853 |   |                    | $      | 22,662 |   |

|                    |   | Before |   |   | After  |   |
|-------------------------|--------|--------|--------|--------|--------|--------|
| Risk-free interest rate |   |   | 0.47   | %      |   |   | 0.47 | % |
| Dividend yield          |   |   | 0      | %      |   |   | 0 | % |
| Volatility factor       |   |   | 154.60 | %      |   |   | 154.60 | % |
| Remaining term (years)  |   |   | 0      |   |   |   | 1 |   |

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|                      |   | Number of Warrants |       |   | Weighted Average Exercise Price |   |   | Weighted Average Remaining Life (years) |   |
|---------------------------|--------|--------------------|------------|--------|---------------------------------|--------|--------|-----------------------------------------|--------|
|                      |   |               |       |   |                            |   |   |                                    |   |
| BALANCE, JULY 31, 2008    |   |               | 7,117,425  |   |                            | $      | 0.83   |                                    |   |   | 0.79 |   |
|                      |   |               |       |   |                            |   |   |                                    |   |   |   |   |
| Issued                    |   |               | 1,544,999  |   |                            |   | 1.00   |                                    |   |   | 1.33 |   |
| Cancelled or expired      |   |               | (2,302,145 | )      |                            |   | 0.60   |                                    |   |   | - |   |
|                      |   |               |       |   |                            |   |   |                                    |   |   |   |   |
| BALANCE, JULY 31, 2009    |   |               | 6,360,279  |   |                            |   | 0.91   |                                    |   |   | 0.20 |   |
| Issued                    |   |               | 14,116,998 |   |                            |   | 0.35   |                                    |   |   | 4.83 |   |
| Cancelled or expired      |   |               | -          |   |                            |   | -      |                                    |   |   | - |   |
|                      |   |               |       |   |                            |   |   |                                    |   |   |   |   |
| BALANCE, OCTOBER 31, 2009 |   |               | 20,477,277 |   |                            | $      | 0.53   |                                    |   |   | 3.54 |   |

|                      |   | Number of Options |      |   | Weighted Average Exercise Price |   |   | Weighted Average Remaining Life (years) |   |
|---------------------------|--------|-------------------|-----------|--------|---------------------------------|--------|--------|-----------------------------------------|--------|
|                      |   |              |      |   |                            |   |   |                                    |   |
| BALANCE, JULY 31, 2008    |   |              | 3,800,000 |   |                            | $      | 0.33   |                                    |   |   | 8.83 |   |
| Issued                    |   |              | 2,730,000 |   |                            |   | 0.35   |                                    |   |   | 10.00 |   |
|                      |   |              |      |   |                            |   |   |                                    |   |   |   |   |
| BALANCE, JULY 31, 2009    |   |              | 6,530,000 |   |                            |   | 0.34   |                                    |   |   | 8.16 |   |
| Issued                    |   |              | -         |   |                            |   | -      |                                    |   |   | - |   |
|                      |   |              |      |   |                            |   |   |                                    |   |   |   |   |
| BALANCE, OCTOBER 31, 2009 |   |              | 6,530,000 |   |                            | $      | 0.34   |                                    |   |   | 7.91 |   |

|                       |   | Number of Shares |      |   | Weighted-Average Grant Date Fair Value |   |
|----------------------------|--------|------------------|-----------|--------|----------------------------------------|--------|
|                       |   |             |      |   |                                   |   |
| UNVESTED, JULY 31, 2008    |   |             | 33,333    |   |                                   | $      | 0.50 |   |
| Issued                     |   |             | 1,280,000 |   |                                   |   | 0.48 |   |
| Vested                     |   |             | (353,333  | )      |                                   |   | 0.48 |   |
|                       |   |             |      |   |                                   |   |   |   |
| UNVESTED, JULY 31, 2009    |   |             | 960,000   |   |                                   |   | 0.48 |   |
| Vested                     |   |             | -         |   |                                   |   | - |   |
|                       |   |             |      |   |                                   |   |   |   |
| UNVESTED, OCTOBER 31, 2009 |   |             | 960,000   |   |                                   | $      | 0.48 |   |

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|              |   | Three Months Ended October 31, |   |
|-------------------|--------|-------------------------------------|--------|
|              |   | 2009                                |   |   | 2008 |   |
|              |   |                                |   |   |   |   |
| Interest paid     |   | $                                   | -      |   |   | $ | - |   |
| Income taxes paid |   | $                                   | -      |   |   | $ | - |   |

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 2.

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Table of Contents

|                |   | Gross Acres |      |   | Net Acres (*) |   |
|---------------------|--------|-------------|-----------|--------|---------------|--------|
|                |   |        |      |   |          |   |
| DEVELOPED ACREAGE   |   |        |      |   |          |   |
| Louisiana           |   |        | 175.89    |   |          |   | 131.92 |   |
| Texas               |   |        | 219.00    |   |          |   | 77.04 |   |
|                |   |        |      |   |          |   |   |   |
| UNDEVELOPED ACREAGE |   |        |      |   |          |   |   |   |
| Illinois            |   |        | 3,471.59  |   |          |   | 3,268.29 |   |
| Louisiana           |   |        | 160.00    |   |          |   | 150.08 |   |
| Oklahoma            |   |        | 11,000.00 |   |          |   | 440.00 |   |
| Texas               |   |        | 143.00    |   |          |   | 139.84 |   |
|                |   |        |      |   |          |   |   |   |
|                |   |        | 15,169.48 |   |          |   | 4,207.17 |   |

|      |   | Oil    |   |   | Natural Gas |   |
|-----------|--------|--------|--------|--------|-------------|--------|
|      |   | Gross  |   |   | Net         |   |   | Gross |   |   | Net |   |
|      |   |   |   |   |        |   |   |   |   |   |   |   |
| LOUISIANA |   |   | 4      |   |        |   | 3.00 |   |   |   | - |   |   |   | - |   |
| TEXAS     |   |   | 2      |   |        |   | 2.00 |   |   |   | 1 |   |   |   | 0.03 |   |
|      |   |   |   |   |        |   |   |   |   |   |   |   |   |   |   |   |
|      |   |   | 6      |   |        |   | 5.00 |   |   |   | 1 |   |   |   | 0.03 |   |

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|                        |   | Three Months Ended October 31, 2009 |   |   | Three Months Ended October 31, 2008 |   |   | Period from Inception to October 31, 2009 |   |
|-----------------------------|--------|------------------------------------------|--------|--------|------------------------------------------|--------|--------|------------------------------------------------|--------|
|                        |   |                                     |   |   |                                     |   |   |                                           |   |
| PRODUCTION DATA             |   |                                     |   |   |                                     |   |   |                                           |   |
| Oil (MBbls)                 |   |                                     | 1.1    |   |                                     |   | 1.1    |                                           |   |   | 27.1 |   |
| Natural gas (MMcf)          |   |                                     | 3.0    |   |                                     |   | 2.1    |                                           |   |   | 50.4 |   |
|                        |   |                                     |   |   |                                     |   |   |                                           |   |   |   |   |
| Total (MMcfe)               |   |                                     | 9.7    |   |                                     |   | 8.5    |                                           |   |   | 212.8 |   |
|                        |   |                                     |   |   |                                     |   |   |                                           |   |   |   |   |
| AVERAGE PRICES              |   |                                     |   |   |                                     |   |   |                                           |   |   |   |   |
| Oil (per Bbl)               |   | $                                        | 67.04  |   |                                     | $      | 109.63 |                                           |   | $ | 75.76 |   |
| Natural gas (per Mcf)       |   | $                                        | 2.73   |   |                                     | $      | 8.52   |                                           |   | $ | 5.79 |   |
|                        |   |                                     |   |   |                                     |   |   |                                           |   |   |   |   |
| Total (per Mcfe)            |   | $                                        | 8.53   |   |                                     | $      | 15.87  |                                           |   | $ | 11.01 |   |
|                        |   |                                     |   |   |                                     |   |   |                                           |   |   |   |   |
| AVERAGE COSTSs (per Mcfe)   |   |                                     |   |   |                                     |   |   |                                           |   |   |   |   |
| Lease operating expenses(*) |   | $                                        | 5.01   |   |                                     | $      | 9.05   |                                           |   | $ | 5.92 |   |
| Production tax expense      |   | $                                        | 0.39   |   |                                     | $      | 1.17   |                                           |   | $ | 0.33 |   |

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|                                 |   | Three Months Ended October 31, 2009 (As Reported) |       |   | Three Months Ended October 31, 2009 (Restated) |   |       | Three Months Ended October 31, 2008 |   |
|--------------------------------------|--------|-------------------------------------------------------------|------------|--------|-----------------------------------------------------|--------|------------|------------------------------------------|--------|
|                                 |   |                                                        |       |   |                                                |   |       |                                     |   |
| OIL AND GAS REVENUES                 |   | $                                                           | 82,933     |   |                                                | $      | 82,933     |                                     |   | $ | 135,427 |   |
|                                 |   |                                                        |       |   |                                                |   |       |                                     |   |   |   |   |
| EXPENSES                             |   |                                                        |       |   |                                                |   |       |                                     |   |   |   |   |
| Consulting fees                      |   |                                                        | 133,985    |   |                                                |   | 133,985    |                                     |   |   | 171,392 |   |
| Consulting fees - stock based        |   |                                                        | 175,078    |   |                                                |   | 175,078    |                                     |   |   | 5,556 |   |
| Depreciation and depletion           |   |                                                        | 16,050     |   |                                                |   | 16,050     |                                     |   |   | 9,927 |   |
| Direct operating costs               |   |                                                        | 52,469     |   |                                                |   | 52,469     |                                     |   |   | 87,160 |   |
|                                 |   |                                                        |       |   |                                                |   |       |                                     |   |   |   |   |
| General and administrative           |   |                                                        | 42,553     |   |                                                |   | 42,553     |                                     |   |   | 60,568 |   |
|                                 |   |                                                        |       |   |                                                |   |       |                                     |   |   |   |   |
| Interest and financing charges       |   |                                                        | 431,145    |   |                                                |   | 70,068     |                                     |   |   | - |   |
|                                 |   |                                                        |       |   |                                                |   |       |                                     |   |   |   |   |
| Management fees                      |   |                                                        | 102,546    |   |                                                |   | 102,546    |                                     |   |   | 90,520 |   |
|                                 |   |                                                        |       |   |                                                |   |       |                                     |   |   |   |   |
| Professional fees                    |   |                                                        | 102,379    |   |                                                |   | 102,379    |                                     |   |   | 57,402 |   |
|                                 |   |                                                        |       |   |                                                |   |       |                                     |   |   |   |   |
| Travel and promotion                 |   |                                                        | 24,907     |   |                                                |   | 24,907     |                                     |   |   | 13,024 |   |
|                                 |   |                                                        |       |   |                                                |   |       |                                     |   |   |   |   |
| TOTAL EXPENSES                       |   |                                                        | 1,081,112  |   |                                                |   | 720,035    |                                     |   |   | 495,549 |   |
|                                 |   |                                                        |       |   |                                                |   |       |                                     |   |   |   |   |
| LOSS BEFORE OTHER ITEMS              |   |                                                        | (998,179   | )      |                                                |   | (637,102   | )                                        |   |   | (360,122 | ) |
|                                 |   |                                                        |       |   |                                                |   |       |                                     |   |   |   |   |
| OTHER ITEMS                          |   |                                                        |       |   |                                                |   |       |                                     |   |   |   |   |
| Gain on debt settlement              |   |                                                        | 4,195      |   |                                                |   | 4,195      |                                     |   |   | - |   |
| Interest and other income            |   |                                                        | 112        |   |                                                |   | 112        |                                     |   |   | - |   |
| Foreign exchange                     |   |                                                        | (33,528    | )      |                                                |   | (33,528    | )                                        |   |   | - |   |
| Loss on warrant derivative liability |   |                                                        | -          |   |                                                |   | (2,038,226 | )                                        |   |   | - |   |
|                                 |   |                                                        |       |   |                                                |   |       |                                     |   |   |   |   |
| NET LOSS FOR THE PERIOD              |   | $                                                           | (1,027,400 | )      |                                                | $      | (2,704,549 | )                                        |   | $ | (360,122 | ) |
|                                 |   |                                                        |       |   |                                                |   |       |                                     |   |   |   |   |

|   | . | Barge Canal: Revenue from the Barge Canal project was $47,184 for the three months ended October 31, 2009, as compared to $98,790 for the three months ended October 31, 2008. Average sale prices for oil and natural gas (per Mcf) were 39% and 68% lower respectively in the current period, while average production decreased by 23% for oil and increased by 40% for gas from the prior period. The decrease in oil production resulted from unscheduled maintenance in the current period, while the increase in gas production resulted from flooding in the prior period. The market price of oil and gas increased during the current period, and decreased during the prior period. |
|--------|---|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | . | South Delhi/Big Creek Field: Revenue from the South Delhi / Big Creek Field project was $34,743 for the three months ended October 31, 2009, as compared to $31,255 for the three months ended October 31, 2008. As with Barge Canal, average sale prices for oil was 39% lower in the current period. Average production for the three months ended October 31, 2009 increased by 76% from the prior period. The increase in production resulted from significant maintenance downtime in the prior period. The market price of oil and gas increased during the current period, and decreased during the prior period. |
|--------|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | . | Janssen Lease: Revenue from the Janssen Lease project was $1,006 for the three months ended October 31, 2009, as compared to $5,164 for the three months ended October 31, 2008. As with Barge Canal and South Delhi/Big Creek Field, average sale prices for oil and natural gas (per Mcf) were 39% and 68% lower respectively in the current period. |
|--------|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | . | Consulting fees decreased to $133,985 during the three months ended October 31, 2009, from $171,392 during the same period ended October 31, 2008, due primarily to corporate development in the prior period relating to the listing process which completed in August, 2008. |
|--------|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | . | Consulting fees - stock based increased to $175,078 during the three months ended October 31, 2009, from $5,556 during the same period ended October 31, 2008. The current and prior period expense consists of the fair value of shares and option grants issued to consultants that were earned during the period. |
|--------|---|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | . | Depreciation and depletion increased to $16,050 during the three months ended October 31, 2009, from $9,927 during the same period ended October 31, 2008. Depletion of capitalized oil and natural gas properties is based on production during the current and comparative periods. |
|--------|---|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | . | Direct operating costs were $52,469 during the three months ended October 31, 2009, compared to $87,160 during the same period ended October 31, 2008. Significant developments or changes in direct operating costs per project are outlined as follows: |
|--------|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | i. | Barge Canal: Direct operating costs of $29,819 during the three months ended October 31, 2009, represented approximately 63% of gross production sales during the current period. Direct operating costs of $31,193 during the three months ended October 31, 2008, represented approximately 32% of gross production sales during the prior period. The current period operating costs were a higher percentage of gross production sales than in the prior period due to unscheduled maintenance costs. |
|--------|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ii. | South Delhi/Big Creek Field: Direct operating costs of $21,904 for the three months ended October 31, 2009, represented approximately 63% of gross production sales during the current period. Direct operating costs of $54,744 for the three months ended October 31, 2008, represented approximately 175% of gross production sales during the prior period. Operating costs in the prior period included planned and weather related maintenance charges. |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | iii. | Janssen Lease: Direct operating costs of $746 for the three months ended October 31, 2009, represented approximately 74% of gross production sales during the current period. Direct operating costs of $1,223 for the three months ended October 31, 2008, represented approximately 24% of gross production sales during the prior period. |
|--------|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | . | General and administrative costs decreased to $42,553 during the three months ended October 31, 2009, from $60,568 during the same period ended October 31, 2008, due to significant prior year costs relating to the listing process which completed in August 2008. |
|--------|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | . | Interest and financing charges increased to $70,068, as restated, during the three months ended October 31, 2009, from $Nil during the same period ended October 31, 2008. Interest and financing charges includes the accrued interest and the fair value of warrants issued in conjunction with promissory notes and the accretion of the fair value of warrants issued with convertible debentures. |
|--------|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | . | Management fees increased to $102,546 during the three months ended October 31, 2009, from $90,520 during the same period ended October 31, 2008. Some executive services vary from month to month based on activities and requirements of our company. |
|--------|---|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | . | Professional fees increased to $102,379 during the three months ended October 31, 2009, from $57,402 during the same period ended October 31, 2008, due primarily to increases in legal services relating to corporate and business development during the current period. |
|--------|---|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | . | Travel and promotion increased to $24,907 during the three months ended October 31, 2009, from $13,024 during the same period ended October 31, 2008. As market conditions during the current period improved, additional travel was incurred which related to financing activities. |
|--------|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|                           |   | October 31, 2009 |      |   | October 31, 2009 |   |       | October 31, 2009 |   |   | October 31, 2008 |   |
|--------------------------------|--------|----------------------------|-----------|--------|----------------------------|--------|------------|----------------------------|--------|--------|----------------------------|--------|
|                           |   | (As Reported)              |      |   | (Adjustments)              |   |       | (Restated)                 |   |   |                       |   |
|                           |   |                       |      |   |                       |   |       |                       |   |   |                       |   |
| Cash and cash equivalents      |   | $                          | 1,292,560 |   |                       |   | -          |                       |   | $      | 1,292,560                  |   |   | $ | 180,101 |   |
| Working capital (deficit)      |   |                       | 1,002,568 |   |                       |   | (4,390,338 | )                          |   |   | (3,387,770                 | )      |   |   | (3,977 | ) |
| Total assets                   |   |                       | 2,743,546 |   |                       |   | -          |                       |   |   | 2,743,546                  |   |   |   | 1,725,871 |   |
| Total liabilities              |   |                       | 408,727   |   |                       |   | 4,390,338  |                       |   |   | 4,799,065                  |   |   |   | 384,032 |   |
| Shareholders' equity (deficit) |   |                       | 2,334,819 |   |                       |   | (4,390,338 | )                          |   |   | (2,055,519                 | )      |   |   | 1,341,839 |   |

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| Exhibit | Description of Exhibit                                                                                                                                                                   |
|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|    |                                                                                                                                                                                     |
| 31.1    | Certification of Chief Executive Officer pursuant to Securities Exchange Act of 1934 Rule 13a-14(a) or 15d-14(a).                                                                        |
|    |                                                                                                                                                                                     |
| 31.2    | Certification of Chief Financial Officer pursuant to Securities Exchange Act of 1934 Rule 13a-14(a) or 15d-14(a).                                                                        |
|    |                                                                                                                                                                                     |
| 32.1    | Certifications pursuant to Securities Exchange Act of 1934 Rule 13a-14(b) or 15d-14(b) and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
|    |                                                                                                                                                                                     |

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