UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-Q

[X]  Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
     Act of 1934
     For the quarterly period ended: September 30, 2008

[ ]  Transition report pursuant to Section 13 or 15(d) of the Securities
     Exchange Act of 1934
     For the transition period from _______ to _________

                       Commission file number: 000-53124
                              COLONY ENERGY, INC.
             (Exact name of registrant as specified in its charter)

                Delaware                            76-0662309
   (State or other jurisdiction of              (I.R.S. Employer
    incorporation or organization               Identification No.)


2100 West Loop South, Suite 900, Houston, Texas        77027
  (Address of principal executive offices)           (Zip Code)

                                  713/590-5060
              (Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X]  No

Indicate  by  check mark whether the registrant is a large accelerated filer, an
accelerated  filer, a non-accelerated filer, or a smaller reporting company. See
the  definitions  of "large accelerated filer," "accelerated filer" and "smaller
reporting  company"  in  Rule  12b-2  of  the  Exchange  Act.

     Large  accelerated  filer  [ ]                  Accelerated  filer [ ]

     Non-accelerated  filer [ ]                  Smaller  Reporting  Company [X]
(Do  not  check  if  a  smaller
     reporting  company)

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

The number of shares of common stock, $.001 par value, outstanding as of
November 18, 2008: 6,375,000 shares





<PAGE>
                              COLONY ENERGY, INC.
                        PERIOD ENDED SEPTEMBER 30, 2008

                                     INDEX

PART I.  FINANCIAL INFORMATION                                             Page

   ITEM 1.     FINANCIAL STATEMENTS                                         1

   Financial statements of Colony Energy, Inc. (unaudited):

      Balance sheets as of September 30, 2008 and December 31, 2007         1

      Statements of expenses for the three and nine months
      ended September 30, 2008 and 2007 and period from July 20,
      2000 (inception) through September 30, 2008                           2

      Statements of cash flows for the nine months ended
      September 30, 2008 and 2007 and period from July 20,
      2000 (inception) through September 30, 2008                           3

      Notes to financial statements                                         4

   ITEM 2.     MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
               CONDITION AND RESULTS OF OPERATIONS                          6

   ITEM 4T.     CONTROLS AND PROCEDURES                                    10

PART II.   OTHER INFORMATION                                               11

   ITEM 1.     LEGAL PROCEEDINGS                                           11

   ITEM 6.     EXHIBITS                                                    11

SIGNATURES                                                                 12

<PAGE>

PART I.   FINANCIAL INFORMATION

ITEM 1.   FINANCIAL STATEMENTS

                              COLONY ENERGY, INC.
                         (AN EXPLORATION STAGE COMPANY)
                                 BALANCE SHEETS
                                  (Unaudited)

                                           SEPTEMBER 30,   DECEMBER 31,
                                              2008            2007
ASSETS
Current Assets
    Cash                                   $     98,289    $     136,168
    Prepaid expenses                              6,464            1,470
                                           ------------    -------------
Total Current Assets                            104,753          137,638

OIL AND GAS PROPERTIES, full cost method
    Unevaluated properties, Net of
      Impairment Expense                        277,711          277,383
                                            -----------    -------------
TOTAL ASSETS                                $   382,464    $     415,021
                                            ===========    =============

LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES
    Accounts payable                        $     8,083    $       6,532
    Accrued interest payable                     48,150            6,767
    Notes payable - related parties             725,000          525,000
                                            -----------    -------------
Total Current Liabilities                       781,233          538,299

STOCKHOLDERS'  DEFICIT
Preferred stock, $0.01 par value, 10,000
   shares authorized, none outstanding                -                -
Common stock, 50,000,000 common shares
   authorized with a par value of $0.001,
   6,375,000 common shares issued and
   outstanding                                   6,375             6,375
Subscription receivable                         (9,000)           (9,000)
Additional paid-in capital                       5,693             5,693
Deficit accumulated during the
   exploration stage                          (401,837)         (126,346)
                                             ---------      ------------
Total Stockholders' Deficit                   (398,769)         (123,278)
                                             ---------      ------------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT  $ 382,464      $    415,021
                                             =========      ============

The accompanying notes are an integral part of these financial statements.

                                       1

<PAGE>

                              COLONY ENERGY, INC.
                        (AN EXPLORATION STAGE COMPANY)
                             STATEMENTS OF EXPENSES
               THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2008 AND 2007
                 AND PERIOD FROM JULY 20, 2000 (INCEPTION)
                          THROUGH SEPTEMBER 30, 2008
                                  (Unaudited)

                          Three      Three       Nine     Nine    For the period
                          months     months     months    months   July 20, 2000
                          ended      ended      ended     ended     (Inception)
                        September  September  September  September    through
                        30, 2008   30, 2007   30, 2008   30, 2007  September 30,

OPERATING EXPENSES:

General and
   administrative    $   98,347   $  11,482   $  233,444 $ 11,482  $   280,535
Impairment of
   unevaluated oil
   and gas properties         -           -            -        -       64,383
                     ----------   ---------   ---------- --------  -----------
Total Operating
   Expenses              98,347      11,482      233,444   11,482      344,918
                     ----------   ---------   ---------- --------  -----------

LOSS FROM OPERATIONS    (98,347)    (11,482)    (233,444) (11,482)    (344,918)
                     ----------   ---------   ----------  -------  -----------

OTHER EXPENSES

Interest expense        (15,837)     (4,466)     (42,047)  (4,802)     (56,919)
                     ----------   ---------   ----------  -------  -----------
Total Other Expenses    (15,837)     (4,466)     (42,047)  (4,802)     (56,919)
                     ----------   ---------   ----------  -------  -----------

NET LOSS               (114,184)    (15,948)    (275,491) (16,284)    (401,837)
                     ==========   =========   ==========  =======  ===========

Net basic and diluted
   per common share  $    (0.02)  $       -   $    (0.04) $     -
                     ==========   =========   ==========  =======

Weighted average shares
   outstanding - basic
   and diluted        6,375,000   5,100,000    6,375,000 5,100,000
                     ==========   =========   ========== =========

                                       2

  The accompanying notes are an integral part of these financial statements.


<PAGE>
                              COLONY ENERGY, INC.
                         (AN EXPLORATION STAGE COMPANY)
                            STATEMENTS OF CASH FLOWS
                  NINE MONTHS ENDED SEPTEMBER 30, 2008 AND 2007 AND
          PERIOD FROM JULY 20, 2000 (INCEPTION) THROUGH SEPTEMBER 30, 2008
                                (Unaudited)

                                                            For the period July
                                              Nine Months         20, 2000
                                Nine Months     Ended       (Inception) through
                              Ended September  September      September 30,
                                 30, 2008       30, 2007           2008

CASH FLOWS FROM OPERATING ACTIVITIES

Net loss                     $   (275,491)   $  (16,284)   $     (401,837)
Adjustments to reconcile
   net loss to cash used
   in operating activities:
     Change in:
      Stock Warrants
        accretion                       -             -               593
      Impairment of unevaluated
        oil and gas properties          -             -            64,383
      Changes in assets and
        liabilities:
          Prepaid expenses         (4,994)            -            (6,464)
          Accounts payable and
            accrued liabilities    42,934         4,801            49,901
                              -----------    ----------      ------------
Net Cash Used in Operating
   Activities                    (237,551)      (11,483)         (293,424)

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of  oil and gas
   property                          (328)     (226,757)         (335,562)
                               ----------     ---------       -----------
Net Cash Used in  Investing
   Activities                        (328)     (226,757)         (335,562)

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from the sale of
   common stock                         -           371             2,275
Proceeds of note payable
   - related party                250,000       357,500         1,237,500
Repayment of note payable
   - related party                (50,000)      (50,000)         (512,500)
                            -------------    ----------      ------------
Net cash Provided by
   Financing Activities           200,000       307,871           727,275
                            -------------    ----------      ------------
NET INCREASE (DECREASE)
   IN CASH                        (37,879)       69,631            98,289

CASH AT BEGINNING OF PERIOD       136,168           972                 -
                           --------------    ----------     -------------
CASH AT END OF  PERIOD     $       98,289   $    70,603     $      98,289
                           ==============   ===========     =============

Supplemental cash flow Disclosures
   Interest Paid           $          664   $         -     $       8,768
   Income taxes Paid                    -             -                 -

  The accompanying notes are an integral part of these financial statements.

                                       3
<PAGE>
NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION

Organization

Colony  Energy,  Inc. ("Colony" or the "Company") was originally incorporated in
the  State  of  Delaware  on  July  20, 2000 as "DirectMoviesOnline.Com Inc" but
changed  its  name  to  Colony  Energy,  Inc. on September 12, 2006. The Company
engages  primarily  in the exploration and development of oil and gas properties
in  the  United States. The Company currently participates in the exploration of
several  unevaluated  oil  and  gas  properties.

Basis  of Presentation

The  accompanying  unaudited  interim  financial  statements of Colony have been
prepared  in  accordance  with  accounting  principles generally accepted in the
PlaceNameplacecountry-regionUnited  States  of  America  and  the  rules  of the
Securities  and  Exchange Commission, and should be read in conjunction with the
audited financial statements and notes thereto contained in Colony's Form S-1/A.
In  the  opinion  of management, all adjustments, consisting of normal recurring
adjustments,  necessary  for  a  fair presentation of financial position and the
results  of  operations  for  the  interim periods presented have been reflected
herein.  The  results  of operations for the interim periods are not necessarily
indicative  of  the  results  to  be  expected  for  the full year. Notes to the
financial  statements  that  would  substantially  duplicate  the  disclosures
contained in the audited financial statements for fiscal 2007 as reported in the
Form  S-1/A,  have  been  omitted.

NOTE 2 - GOING CONCERN

Colony  has  been  in  the exploration stage since its formation and has not yet
realized  any  revenues  from its planned operations. It is primarily engaged in
the  acquisition,  exploration  and  development  of oil and gas properties. The
ability  of the Company to emerge from the exploration stage with respect to its
principal  business  activity  is dependent upon its successful efforts to raise
additional debt and/or equity financing and generate significant revenue. Colony
has incurred losses of $401,837 since inception. These factors raise substantial
doubt  regarding  Colony's  ability  to  continue  as  a  going  concern.

Management  plans  to  raise  additional  capital  through  equity  and/or  debt
financings.  Colony  cannot  offer  any assurances that it will be successful in
executing  its  plans  to  continue  as  a  going  concern.  Colony's  financial
statements  for  the  nine-month  ended  September  30,  2008 do not include any
adjustments that might result from the inability to continue as a going concern.

NOTE 3.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates

The preparation of financial statements in conformity with accounting principles
generally  accepted  in the PlaceNameplacecountry-regionUnited States of America
requires  management  to make estimates and assumptions that affect the reported
amounts  of  assets  and  liabilities  and  disclosure  of contingent assets and
liabilities  at the date of the financial statements and the reported amounts of
revenues  and  expenses during the reporting period. Actual results could differ
from  those  estimates.

Cash and Cash Equivalents

Cash  equivalents  include  demand  deposits  with  banks  and all highly liquid
investments  with  original  maturities  of  three  months  or  less.

Fair  Value  of  Financial  Instruments

The  amounts  of  financial  instruments  including  cash  and cash equivalents,
prepaid  expenses,  accounts  payable and notes payable, approximated their fair
values  as  of  September  30,  2008  and  December  31,  2007.

                                       4
<PAGE>
Oil and Gas Properties

The  Company accounts for its oil and natural gas producing activities using the
full cost method of accounting as prescribed by the United States Securities and
Exchange  Commission  (SEC). Accordingly, all costs incurred in the acquisition,
exploration, and development of proved oil and natural gas properties, including
the  costs  of  abandoned  properties,  dry holes, geophysical costs, and annual
lease  rentals  are  capitalized. All general and administrative corporate costs
unrelated  to  drilling  activities  are  expensed  as  incurred. Sales or other
dispositions  of oil and natural gas properties are accounted for as adjustments
to  capitalized costs, with no gain or loss recorded unless the ratio of cost to
proved  reserves  would  significantly  change.  Depletion  of evaluated oil and
natural  gas  properties  is computed on the units of production method based on
proved  reserves.  The  net  capitalized  costs  of  proved  oil and natural gas
properties  are subject to a full cost ceiling limitation in which the costs are
not  allowed to exceed their related estimated future net revenues discounted at
10%,  net  of  tax  considerations.

Costs  associated  with  unevaluated  properties are excluded from the full cost
pool  until  Colony  has  made  a  determination  as  to the existence of proved
reserves.  Colony  reviews its unevaluated properties at the end of each quarter
to  determine  whether the costs incurred should be transferred to the full cost
pool  and  thereby  subject  to  amortization  and  ceiling  test.

At  September  30,  2008 and December 31, 2007, Colony had no proved properties.
Oil  and  gas  properties  consisted  solely  of  unevaluated  properties.

Asset Retirement Obligations

In  August 2001, the Financial Accounting Standard Board (FASB) issued Statement
of  Financial  Accounting  Standards  (SFAS)  No.  143,  "Accounting  for  Asset
Retirement  Obligations" (SFAS 143). SFAS 143 requires that the fair value of an
asset  retirement  cost, and corresponding liability, should be recorded as part
of  the  cost  of  the  related  long-lived  asset and subsequently allocated to
expense  using  a  systematic  and  rational  method. Because the Company has no
proved  oil  and  gas  properties,  no  asset  retirement  obligation was deemed
necessary  as  of  September  30,  2008  and  December  31,  2007.

Revenue Recognition

Colony  recognizes  oil  and  natural  gas  revenue  under  the sales method of
accounting  for  its  interests  in  producing  wells  as oil and natural gas is
produced and sold from those wells.

Provision for Taxes

Colony  has adopted SFAS No. 109 "Accounting for Income Taxes". Pursuant to this
pronouncement,  income  taxes  are  accounted  for  using an asset and liability
approach.  SFAS  No.  109  requires  the  recognition of deferred tax assets and
liabilities  for  the  expected future tax consequences of temporary differences
between  the financial statements and tax bases of assets and liabilities at the
applicable  tax  rates. A valuation allowance is utilized when it is more likely
than  not  that  some  portion  or  all  of  the deferred tax assets will not be
realized.  Deferred  tax  assets and liabilities are adjusted for the effects of
changes  in  tax  laws  and  rates  on  the  date  of  enactment.

Loss per Share of Common Stock

Basic  net  loss  per  share  of common stock is calculated by dividing net loss
available to common stockholders by the weighted average number of common shares
issued  and  outstanding  during  the year. Diluted net loss per common share is
computed  by  dividing  the  net  loss  by the weighted average number of common
shares  outstanding  adjusted  for  potential  dilutive  securities  on  an  "if
converted"  basis.  Common  stock equivalents are excluded from the calculations
when their effect is anti-dilutive. which is the case for all periods presented.

                                       5
<PAGE>
NOTE 4.   RELATED PARTY TRANSACTIONS

Notes  payable  to  related parties of $725,000 at September 30, 2008, represent
funds  advanced  from  CEI  Ventures,  LLC.  The note is due on demand and bears
interest  at  the  rate  of  ten  percent  (10%) per annum. In consideration for
$200,000  of  the  funds  advanced,  warrants  to purchase 400,000 shares of the
Company's  stock  were  issued  to  an  equity  owner  of CEI Ventures, LLC. The
exercise price of the warrants is $0.50 per share and expire August 31, 2013 and
the  warrants are vested immediately The fair value of the warrants is less than
$100,  which  is  immaterial.

ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

                                    GENERAL

     Colony  Energy, Inc. is an early-stage, independent oil and gas exploration
and  production company based in Houston, Texas.  Our company was formed for the
purpose  of providing video-on-demand service to consumers by means of broadband
or  high-speed  Internet  connections.  This  business  did not succeed, and our
company  had been inactive from a business perspective since early 2001.  During
the  summer  of  2006,  we  began  considering  the  possible  re-activation  of
operations  with  a focus on the acquisition of attractive crude oil and natural
gas prospects, and the exploration, development and production of oil and gas on
these  prospects.  We  entered  into our first project related to oil and gas in
August  2007.

     On  August  29, 2007, we entered into an agreement (the "Enexco Agreement")
with  Enexco,  Inc.  ("Enexco"), a privately held entity engaged in the drilling
and completion of wells on oil and gas leases covering lands located in Oklahoma
and  Texas.  Under the terms of the Enexco Agreement, we will make available, at
our  discretion, to Enexco funds to cover 65% of the costs incurred by Enexco in
connection  with  its  acquisition  of  three certain oil and gas leases, two in
Oklahoma  and one in Texas. In consideration of our providing this financing, we
received  an  interest in each of the three leases, and an option to participate
in  the  drilling  of  each well on any of these leases.  Before any well can be
drilled  on  any  of  these leases, Enexco must repay the amount loaned by us to
acquire  the  lease.  Enexco  has  subsequently  paid  off  all amounts advanced
pursuant  to  the  Enexco  Agreement.

We  have  acquired  our  only oil and gas assets thus far pursuant to the Enexco
Agreement,  although  we are currently considering other assets to acquire.  The
first well in which we participated pursuant to the Enexco Agreement was drilled
to  its  target  depth  and  encountered the target sand.  However, the sand was
"tight," and this well on the lease in Okfuskee County, Oklahoma was plugged and
abandoned.  Production has begun on our second well, located in Seminole County,
Oklahoma  and  in  which  we are participating pursuant to the Enexco Agreement.
However, no distributions have been made with respect to such production pending
the  outcome  of  unitization  hearings  and  calculations  of the final revenue
distributions.  Due  to  the uncertainty of the amount of revenue and the timing
of the revenue distribution, no revenues from this production have been recorded
for  this  production.

On  July 31, 2008, the Company entered into contribution agreements with a total
of six parties, whereby these parties would contribute and assign to the Company
certain assets separately owned by them in exchange for shares of a new class of
preferred stock and for the assumption of aggregate of $890,000 in indebtedness.
The  consummation  of this transaction is subject to several closing conditions,
including, without limitation, that the Company complete (within 180 days of the
execution  of  the  contribution agreements) a private placement of common stock
raising  at  least  $15.0  million,  and  (in certain cases) the Company procure
releases  of certain personal guaranties.  If this transaction is completed, the

                                       6
<PAGE>
Company  expects the Board of Directors of the Company will be reconstituted and
elected  largely  by  the  contributors  of  the  assets,  who  would then own a
significant  percentage  of  the  Company's  outstanding  voting stock.  In such
event,  the  reconstituted  Board will control the Company.  Notwithstanding the
preceding,  management  believes  that  the  likelihood  of  consummating  the
transactions  described  in  this  paragraph  in  the  form  in  which they were
originally  agreed upon has been substantially reduced.  This belief is based on
the  sudden  and  dramatic  negative  developments  that took place in the third
quarter  of 2008 and the following October with respect to the stock market, the
price of oil and gas, and the capital markets providing financing to oil and gas
exploration  and  production  companies.  Such developments have greatly reduced
the  likelihood that the closing conditions to the transaction can be satisfied.
There can be no assurance that the transactions described in this paragraph will
be  consummated.

     Furthermore,  there  can  be no assurance that we will be successful in our
exploration,  development,  and production activities.  The oil and gas business
involves  numerous  risks,  the  principal  ones  of  which are described in the
section  captioned  "Risk  Factors"  in  our  General  Form  for Registration of
Securities  on  Form  10.

     The  following  discussion  and  analysis  of  our  financial condition and
results  of  operations  should  be  read  in  conjunction  with  our  financial
statements  and  related notes included elsewhere in this Report. In addition to
historical  information,  the discussion in this Report contains forward-looking
statements  that  involve  risks  and uncertainties. Actual results could differ
materially  from  those  anticipated  by these forward-looking statements due to
factors including, but not limited to, those factors set forth elsewhere in this
Report  and  in  the  section  captioned  "RISK FACTORS" in our General Form for
Registration  of  Securities  on  Form  10.

                             RESULTS OF OPERATIONS

                 Quarter Ended September 30, 2008 Compared to the
                       Quarter Ended September 30, 2007

     We  had limited developmental activities in the third quarter of 2008 as we
continued  our initial oil and gas exploration and production efforts.  In third
quarter  of 2008, we did consider and evaluate a number of acquisition prospects
(which  did  not result in much in the way of expenses), and we did complete the
negotiation  and  documentation of a proposed significant transaction (which did
result in comparably larger expenses).  In third quarter of 2007, our activities
were  more  limited  as  we  merely  prepared  to  activate  our exploration and
production  activities.  We  had  no  revenues  in  the  third  quarter of 2007.
Production  has  begun on our second well, located in Seminole County, Oklahoma.
However, no distributions have been made with respect to such production pending
the  outcome  of  unitization  hearings  and  calculations  of the final revenue
distributions.  Due  to  the uncertainty of the amount of revenue and the timing
of the revenue distribution, no revenues from this production have been recorded
for  the  third  quarter  of  2008.  In  the  third quarter of 2008, our largest
expense  was $98,347 in general and administrative expenses, compared to $11,482
in  the third quarter of 2007.  The increase in these expenses was the result of
the  due  diligence  pertaining  to,  and the negotiation and preparation of the
documentation  governing, the proposed contribution transaction described above,
and  (to  a  lesser extent) the more active operations that we were undertaking.
Our interest expense in the third quarter of 2008 increased to $15,837, compared
to  $4,466  in  the  third  quarter  of 2007.  This increase was due to a larger
outstanding  balance  of  indebtedness.  As a result of these third quarter 2008
expenses, we experienced a $114,184 net loss for the third quarter of 2008, or a
net  loss  of  $0.02  per  share.

                                       7
<PAGE>
            Nine months Ended September 30, 2008 Compared to the
                    Nine months Ended September 30, 2007

     We had limited developmental activities in the first nine months of 2008 as
we  continued  our  initial  oil and gas exploration and production efforts.  In
first  nine months of 2008, we did consider and evaluate a number of acquisition
prospects  (which  did  not  result  in much in the way of expenses), and we did
complete the negotiation and documentation of a proposed significant transaction
(which did result in comparably larger expenses).  In first nine months of 2007,
our  activities  were  more  limited  as  we  merely  prepared  to  activate our
exploration  and  production  activities.  We  had no revenues in the first nine
months  of  2007.  Production  has begun on our second well, located in Seminole
County, Oklahoma.  However, no distributions have been made with respect to such
production  pending  the outcome of unitization hearings and calculations of the
final  revenue  distributions.  Due  to the uncertainty of the amount of revenue
and the timing of the revenue distribution, no revenues from this production has
been  recorded  for  the first nine months of 2008.  In the first nine months of
2008,  our  largest expense was $233,444 in general and administrative expenses,
compared  to  $11,482  in  the first nine months of 2007.  The increase in these
expenses  was  the  result of the third quarter due diligence pertaining to, and
the  negotiation  and  preparation  of the documentation governing, the proposed
contribution  transaction  described  above,  and  (to a lesser extent) the more
active  operations  that we were undertaking.  Our interest expense in the first
nine  months  of 2008 increased to $42,047, compared to $4,802 in the first nine
months  of  2007.  This  increase  was  due  to  a larger outstanding balance of
indebtedness.  As  a  result,  we  experienced a $275,491 net loss for the first
nine  months  of  2008,  or  a  net  loss  of  $0.04  per  share.

                        LIQUIDITY AND CAPITAL RESOURCES

     As  of September 30, 2008, we had cash of approximately $98,289, a decrease
of  $37,879,  versus  cash  of  approximately  $136,168 as of December 31, 2007.

     We  have already raised "seed" capital in the form of loans.  The party who
made  some  of  these  loans  was  CEI Ventures, LLC, an entity owned by Kent E.
Lovelace,  Jr.  (a  director and an officer of ours), the F.E.I. Energy Trust (a
significant  stockholder  of  ours), and  Westside  Resources, L.P. ("WRLP"), an
entity  of  which  Jimmy D. Wright (a director of ours) is the sole owner, and a
private  investor.  The  loans  from  CEI  Ventures,  LLC  totaled approximately
$725,000,  of  which  $200,000  was borrowed during the third quarter 2008.  The
proceeds  of  this loan went to fund our obligations under the Enexco Agreement,
to  pay  general  operating  expenses  and  to  retire  a  loan made to us by an
affiliate of ours.  This loan is secured by all of our assets, including our oil
and  gas  interests heretofore received in connection with the Enexco Agreement,
as well as all future oil and gas interests.  Interest accrues on this loan at a
rate  of  10%  per annum.  This loan can become due and payable at any time upon
the  demand  of  the  lender.  In  consideration  of making the loan, we granted
warrants  to  the  owners of CEI Ventures, LLC to purchase up to an aggregate of
1,450,001  shares  of  our  common stock for a per-share exercise price of $.50.
These warrants have a term of and are exercisable for five years.  In connection
with  this loan, we agreed to register all shares separately owned by the owners
of  CEI  Ventures,  LLC  or  to  be  acquired pursuant to derivative securities,
including  the  shares  to  be  acquired upon exercise of the warrants issued in
connection  with  the  loans  described above.  In connection with this loan, we
executed  "piggy  back"  registration  rights  agreement in favor of each of the
owners of CEI Ventures, LLC, whereby each of them will have the right to include
in any registration with the U.S. Securities and Exchange Commission any and all
shares  owned  by  them  or  to  be  acquired pursuant to derivative securities,
including  the  shares  to  be  acquired upon exercise of the warrants issued in
connection  with  the  loan  described  above.

     Currently,  we  have  only limited capital to undertake any exploration and
production  activities.  We  are  not  currently  planning  on  undertaking  any
exploration  and  production  activities  while  the  outcome  of  the  proposed
contribution  transaction described above is pending.  Regardless of the outcome
of  this transaction, we will most likely need to obtain additional financing to
pursue  additional  opportunities.  The amount of capital that we will need will

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<PAGE>
depend  on  the outcome of the proposed contribution transaction described above
and  the  scope  of the business activities that we ultimately decide to pursue,
which  is  uncertain  at  this  time.  We  currently  do  not  have  any binding
commitments  for,  or  readily  available  sources of, additional financing.  We
cannot  assure  anyone  that  additional  financing will be available to us when
needed  or,  if  available,  that  it can be obtained on commercially reasonably
terms.  If  we  do not obtain additional financing we will not be able to expand
the  scope  of our business or even stay in business for that matter.  If we are
unable  to obtain additional funds, we may have to reduce the scope our business
activities.  If  we do not obtain additional financing, we may be constrained to
attempt to sell our oil and gas interests that we have accumulated.  However, we
cannot  assure anyone that we will be able to find interested buyers or that the
funds  received  from  any  such  sale would be adequate to fund our activities.
Under  certain  circumstances,  we  could  be forced to cease our operations and
liquidate  our  remaining  assets,  if  any.

     To  conserve  on  our  capital requirements, we intend occasionally to seek
other  industry  investors who are willing to participate in our exploration and
production  activities.  We  expect  to  retain  a promotional interest in these
prospects,  but  generally  we  will  have to finance a portion (and sometimes a
significant  portion)  of  the  acquisition  and  drilling  costs.  Also, we may
acquire  interests  in  properties  by  issuing  shares  of  our  common  stock.

                   CRITICAL ACCOUNTING POLICIES AND ESTIMATES

     Our  discussion  of  our  financial  condition and results of operations is
based  on  the information reported in our financial statements. The preparation
of  our  financial statements requires us to make assumptions and estimates that
affect  the  reported  amounts  of assets, liabilities, revenues and expenses as
well  as  the  disclosure of contingent assets and liabilities as of the date of
our  financial  statements.  We base our assumptions and estimates on historical
experience  and  other  sources  that  we  believe to be reasonable at the time.
Actual  results  may  vary  from  our estimates due to changes in circumstances,
weather,  politics,  global  economics,  mechanical  problems,  general business
conditions  and  other factors. Our significant accounting policies are detailed
in  Note  3  to  our financial statements included in this Quarterly Report.  We
have outlined below certain of these policies that have particular importance to
the  reporting  of  our  financial  condition and results of operations and that
require  the  application  of  significant  judgment  by  our  management.

KEY  DEFINITIONS
----------------

     Proved  reserves,  as  defined  by the SEC, are the estimated quantities of
crude  oil,  condensate, natural gas and natural gas liquids that geological and
engineering data demonstrate with reasonable certainty are recoverable in future
years  from  known  reservoirs under existing economic and operating conditions.
Valuations  include consideration of changes in existing prices provided only by
contractual  arrangements,  but not on escalations based upon future conditions.
Prices do not include the effect of derivative instruments, if any, entered into
by  us.

     Proved  developed  reserves  are  those  reserves  expected to be recovered
through existing equipment and operating methods. Additional oil and gas volumes
expected  to  be  obtained  through  the application of fluid injection or other
improved recovery techniques for supplementing the natural forces and mechanisms
of primary recovery are included as proved developed reserves only after testing
of  a pilot project or after the operation of an installed program has confirmed
through  production  response  that  increased  recovery  will  be  achieved.

     Proved  undeveloped  reserves  are  those  reserves that are expected to be
recovered  from new wells on non-drilled acreage, or from existing wells where a
relatively  major  expenditure  is  required  for  re-completion.  Reserves  on
non-drilled  acreage  are  limited to those drilling units offsetting productive
units  that  are  reasonably certain of production when drilled. Proved reserves
for  other  non-drilled units are claimed only where it can be demonstrated with
certainty  that  there  is continuity of production from the existing productive
formation.

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<PAGE>
USE  OF  ESTIMATES
------------------

     The  preparation  of  financial  statements  in  conformity with accounting
principles  generally  accepted  in  the  United  States  of  America  requires
management to make estimates and assumptions that affect the reported amounts of
assets  and  liabilities  and disclosure of contingent assets and liabilities at
the  date  of  the financial statements and the reported amounts of revenues and
expenses  during  the  reporting  period. Actual results could differ from those
estimates.

 OIL  AND  GAS  PROPERTIES
 -------------------------

     We  account for our oil and natural gas producing activities using the full
cost  method  of  accounting  as  prescribed by the United States Securities and
Exchange  Commission  (SEC). Accordingly, all costs incurred in the acquisition,
exploration, and development of proved oil and natural gas properties, including
the  costs  of  abandoned  properties,  dry holes, geophysical costs, and annual
lease  rentals  are  capitalized. All general and administrative corporate costs
unrelated  to  drilling  activities  are  expensed  as  incurred. Sales or other
dispositions  of oil and natural gas properties are accounted for as adjustments
to  capitalized costs, with no gain or loss recorded unless the ratio of cost to
proved  reserves  would  significantly  change.  Depletion  of evaluated oil and
natural  gas  properties  is computed on the units of production method based on
proved  reserves.  The  net  capitalized  costs  of  proved  oil and natural gas
properties  are subject to a full cost ceiling limitation in which the costs are
not  allowed to exceed their related estimated future net revenues discounted at
10%,  net  of  tax considerations.  Costs associated with unevaluated properties
are  excluded  from  the full cost pool until we have made a determination as to
the  existence  of  proved reserves. We review our unevaluated properties at the
end  of  each  quarter  to  determine  whether  the  costs  incurred  should  be
transferred  to  the  full  cost  pool  and  thereby subject to amortization and
ceiling  test.

ASSET  RETIREMENT  OBLIGATIONS
------------------------------

     In  August  2001,  the  FASB  issued  SFAS  No.  143,  Accounting for Asset
Retirement  Obligations  (SFAS 143). SFAS 143 requires that the fair value of an
asset  retirement  cost, and corresponding liability, should be recorded as part
of  the  cost  of  the  related  long-lived  asset and subsequently allocated to
expense  using  a  systematic  and  rational  method.

REVENUE  RECOGNITION
--------------------

     We  recognize  oil  and  natural  gas  revenue  under  the  sales method of
accounting  for  our  interests  in  producing  wells  as oil and natural gas is
produced  and  sold  from  those  wells.

PROVISIONS  FOR  TAXES
----------------------

     We  have  adopted  SFAS  No. 109 "Accounting for Income Taxes". Pursuant to
this  pronouncement, income taxes are accounted for using an asset and liability
approach.  SFAS  No.  109  requires  the  recognition of deferred tax assets and
liabilities  for  the  expected future tax consequences of temporary differences
between  the financial statements and tax bases of assets and liabilities at the
applicable  tax  rates. A valuation allowance is utilized when it is more likely
than  not,  that  some portion of, or all of the deferred tax assets will not be
realized.  Deferred  tax  assets and liabilities are adjusted for the effects of
changes  in  tax  laws  and  rates  on  the  date  of  enactment.


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<PAGE>


FORWARD-LOOKING STATEMENTS

     Statements  in  the  preceding  discussion  relating  to  future  plans,
projections,  events,  or  conditions  are  forward-looking  statements.  Actual
results,  including  production  growth  and  capital  spending,  could  differ
materially  due  to  changes  in long-term oil or gas prices or other changes in
market  conditions  affecting  the  oil  and  gas  industry; political events or
disturbances;  severe  weather  events;  reservoir  performance; changes in OPEC
quotas;  timely  completion  of  development  projects;  changes in technical or
operating  conditions; and other factors including those discussed herein and in
the  section  captioned  "RISK  FACTORS" in our General Form for Registration of
Securities  on  Form  10.

ITEM 4T.  CONTROLS AND PROCEDURES

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

     Our  Principal  Executive  Officer  and  Principal Financial Officer, after
evaluating  the  effectiveness  of  our  disclosure  controls and procedures (as
defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of
the  period covered by this report, have concluded that, based on the evaluation
of  these  controls  and procedures, that our disclosure controls and procedures
were  not  effective  due  to  the  lack  of  segregation of duties in financial
reporting,  as  our  accounting  functions  are  performed by one person with no
internal review, as our company does not have an audit committee. This is due to
the  company's lack of working capital to hire additional staff. To remedy this,
we  intend  to  engage  another accountant to assist with financial reporting as
soon  as  our  finances  will  allow.

CHANGE  IN  INTERNAL  CONTROLS  OVER  FINANCIAL  REPORTING

     There have not been any changes in our predecessors' internal controls over
financial  reporting  that  occurred during the quarterly period ended September
30,  2008  that  has  materially affected, or is reasonably likely to materially
affect,  our  internal  controls  over  financial  reporting.

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<PAGE>
PART II. OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

     We  are  not  now  a  party to any legal proceeding requiring disclosure in
accordance  with  the  rules of the U.S. Securities and Exchange Commission.  In
the  future,  we  may  become involved in various legal proceedings from time to
time,  either  as  a  plaintiff  or as a defendant, and either in or outside the
normal  course  of business.  We are not now in a position to determine when (if
ever)  such  a  legal proceeding may arise. If we ever become involved in such a
legal  proceeding,  our  financial condition, operations, or cash flows could be
materially  and  adversely  affected,  depending  on the facts and circumstances
relating  to  such  proceeding.

ITEM 6.  EXHIBITS

(a)     The  following  exhibits  are  filed  with  this Quarterly Report or are
incorporated  herein  by  reference:

Exhibit
Number    Description

31.01     Certification pursuant to Rule 13a-14(a) of the Securities Exchange
          Act of 1934.
31.02     Certification pursuant to Rule 13a-14(a) of the Securities Exchange
          Act of 1934.
32.01     Certification Pursuant to 18 U.S.C. Section 1350, as pursuant to
          Section 906 of the Sarbanes-Oxley Act of 2002.
32.02     Certification Pursuant to 18 U.S.C. Section 1350, as pursuant to
          Section 906 of the Sarbanes-Oxley Act of 2002.

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<PAGE>
                                   SIGNATURES

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

                                        COLONY ENERGY, INC.
                                       (Registrant)


                                       By:  /s/ Kent E. Lovelace, Jr.
                                            -------------------------
                                            Kent E. Lovelace, Jr.,
                                            Chief Executive Officer
                                            (Principal Executive Officer,
                                            Principal Financial Officer and
                                            Principal Accounting Officer)
November 18, 2008

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