----

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| x | Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended January 31, 2010 |
|---|-----------------------------------------------------------------------------------------------------------------------------------------|

| 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.) |
|                                                           |   |                                 |
| 600 Leopard Street, Suite 2015, Corpus Christi, Texas          |   | 78401                                |
| (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 |

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|   | 1) | In October and November 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. |
|--------|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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ST

| PART I - FINANCIAL INFORMATION |     |
|--------------------------------|----------|
|                           |     |
|                           | Item 1.  | Financial Statements | 4 |
|                           |     |   |   |
|                           | Item 2.  | Management's Discussion and Analysis of Financial Condition and Results of Operations | 20 |
|                           |     |   |   |
|                           | Item 3.  | Quantitative and Qualitative Disclosures About Market Risk | 29 |
|                           |     |   |   |
|                           | Item 4.  | Controls and Procedures | 29 |
|                           |     |   |   |
| PART II - OTHER INFORMATION    |     |
|                           |     |
|                           | Item 1.  | Legal Proceedings | 30 |
|                           |     |   |   |
|                           | Item 1A. | Risk Factors | 30 |
|                           |     |   |   |
|                           | Item 2.  | Unregistered Sales of Equity Securities and Use of Proceeds | 30 |
|                           |     |   |   |
|                           | Item 3.  | Defaults Upon Senior Securities | 30 |
|                           |     |   |   |
|                           | Item 4.  | (Removed and Reserved) | 30 |
|                           |     |   |   |
|                           | Item 5.  | Other Information | 30 |
|                           |     |   |   |
|                           | Item 6.  | Exhibits | 31 |
|                           |     |   |   |
| SIGNATURES                     | 32       |

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It

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|                                                                                                                               |   | January 31, 2010(Restated) |        |    | July 31, 2009 |   |
|------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------|-------------|---------|--------------------|--------|
|                                                                                                                               |   |                            |        |    |               |   |
|                                                                                                                               |   |                            |        |    |               |   |
|                                                                                                                               |   |                            |        |    |               |   |
| CURRENT ASSETS                                                                                                                     |   |                            |        |    |               |   |
| Cash                                                                                                                               |   | $                               | 1,093,379   |    |               | $      | 18,793 |   |
| Accounts receivable                                                                                                                |   |                            | 100,747     |    |               |   | 35,073 |   |
| Prepaid expenses and deposits                                                                                                      |   |                            | 32,016      |    |               |   | 44,478 |   |
|                                                                                                                               |   |                            |        |    |               |   |   |   |
|                                                                                                                               |   |                            | 1,226,142   |    |               |   | 98,344 |   |
|                                                                                                                               |   |                            |        |    |               |   |   |   |
| RECLAMATION BONDS (Note 3)                                                                                                         |   |                            | 59,317      |    |               |   | 59,317 |   |
| EQUIPMENT (Note 4)                                                                                                                 |   |                            | 70,363      |    |               |   | 29,830 |   |
| OIL AND GAS PROPERTIES (Note 5)                                                                                                    |   |                            |        |    |               |   |   |   |
| Proved properties                                                                                                                  |   |                            | 1,023,539   |    |               |   | 986,926 |   |
| Unproved properties                                                                                                                |   |                            | 446,881     |    |               |   | 295,454 |   |
|                                                                                                                               |   |                            |        |    |               |   |   |   |
| TOTAL ASSETS                                                                                                                       |   | $                               | 2,826,242   |    |               | $      | 1,469,871 |   |
|                                                                                                                               |   |                            |        |    |               |   |   |   |
| CURRENT LIABILITIES                                                                                                                |   |                            |        |    |               |   |   |   |
| Accounts payable and accrued liabilities                                                                                           |   | $                               | 80,817      |    |               | $      | 403,804 |   |
| Convertible notes (Note 6)                                                                                                         |   |                            | 88,696      |    |               |   | 42,718 |   |
| Warrant derivative liability(Note 7)                                                                                               |   |                            | 4,739,506   |    |               |   | - |   |
| Due to related parties (Note 8)                                                                                                    |   |                            | 29,326      |    |               |   | 459,257 |   |
|                                                                                                                               |   |                            |        |    |               |   |   |   |
|                                                                                                                               |   |                            | 4,938,345   |    |               |   | 905,779 |   |
|                                                                                                                               |   |                            |        |    |               |   |   |   |
| ASSET RETIREMENT OBLIGATIONS (Note 9)                                                                                              |   |                            | 23,045      |    |               |   | 22,662 |   |
|                                                                                                                               |   |                            |        |    |               |   |   |   |
| TOTAL LIABILITIES                                                                                                                  |   |                            | 4,961,390   |    |               |   | 928,441 |   |
| STOCKHOLDERS' EQUITY (DEFICIT)                                                                                                     |   |                            |        |    |               |   |   |   |
|                                                                                                                               |   |                            |        |    |               |   |   |   |
| Capital stock (Note 10)                                                                                                            |   |                            |        |    |               |   |   |   |
| Common stock $0.001 par value: 500,000,000 shares authorized 48,774,946 shares issued and outstanding (July 31, 2009 - 29,350,827) |   |                            | 48,775      |    |               |   | 29,351 |   |
| Additional paid-in capital                                                                                                         |   |                            | 8,701,999   |    |               |   | 7,688,912 |   |
| Obligation to issue shares                                                                                                         |   |                            | 135,457     |    |               |   | 37,382 |   |
| Share subscriptions                                                                                                                |   |                            | 18,012      |    |               |   | 356,062 |   |
| Deficit accumulated during the exploration stage                                                                                   |   |                            | (11,039,391 | )       |               |   | (7,570,277 | ) |
|                                                                                                                               |   |                            |        |    |               |   |   |   |
| Total stockholders’ equity (deficit)                                                                                         |   |                            | (2,135,148  | )  |               |   | 541,430 |   |
|                                                                                                                               |   |                            |        |    |               |   |   |   |
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)                                                                         |   | $                               | 2,826,242   |    |               | $      | 1,469,871 |   |

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|                                                                  |   | Three Months Ended January 31, 2010 (Restated) |        |   | Three Month Ended January 31, 2009 |   |       | Six Months Ended January 31, 2010 (Restated) |   |   | Six Months Ended January 31, 2009 |   |   | For the Period from April 12, 2005 (inception) to January 31, 2010 (Restated) |       |
|-----------------------------------------------------------------------|--------|-----------------------------------------------------|-------------|--------|-----------------------------------------|--------|------------|---------------------------------------------------|--------|--------|----------------------------------------|--------|--------|-----------------------------------------------------------------------------------------|------------|
|                                                                  |   |                                                |        |   |                                    |   |       |                                              |   |   |                                   |   |   |                                                                                    |       |
| OIL AND GAS REVENUES (Note 8)                                         |   | $                                                   | 137,763     |   |                                    | $      | 124,233    |                                              |   | $      | 220,696                                |   |   | $                                                                                       | 259,442    |   |   | $ | 2,485,807 |   |
|                                                                  |   |                                                |        |   |                                    |   |       |                                              |   |   |                                   |   |   |                                                                                    |       |   |   |   |   |   |
| EXPENSES                                                              |   |                                                |        |   |                                    |   |       |                                              |   |   |                                   |   |   |                                                                                    |       |   |   |   |   |   |
| Consulting fees                                                       |   |                                                | 277,845     |   |                                    |   | 73,052     |                                              |   |   | 411,830                                |   |   |                                                                                    | 244,444    |   |   |   | 2,407,262 |   |
| Consulting fees - stock based (Note 10)                               |   |                                                | 323,426     |   |                                    |   | 5,555      |                                              |   |   | 498,504                                |   |   |                                                                                    | 11,111     |   |   |   | 2,069,909 |   |
| Depreciation and depletion                                            |   |                                                | 23,651      |   |                                    |   | 17,310     |                                              |   |   | 39,701                                 |   |   |                                                                                    | 27,237     |   |   |   | 251,168 |   |
| Direct operating costs (Note 8)                                       |   |                                                | 161,702     |   |                                    |   | 103,632    |                                              |   |   | 214,171                                |   |   |                                                                                    | 190,792    |   |   |   | 1,924,159 |   |
| General and administrative                                            |   |                                                | 51,484      |   |                                    |   | 32,410     |                                              |   |   | 94,037                                 |   |   |                                                                                    | 92,978     |   |   |   | 514,879 |   |
| Impairment of properties (Note 5)                                     |   |                                                | -           |   |                                    |   | 3,700      |                                              |   |   | -                                      |   |   |                                                                                    | 3,700      |   |   |   | 233,306 |   |
| Interest and financing charges (Notes 6, 8 and 10)                    |   |                                                | 32,098      |   |                                    |   | 9,757      |                                              |   |   | 102,166                                |   |   |                                                                                    | 9,757      |   |   |   | 167,152 |   |
| Management fees (Note 8)                                              |   |                                                | 166,297     |   |                                    |   | 81,224     |                                              |   |   | 268,843                                |   |   |                                                                                    | 171,744    |   |   |   | 1,316,168 |   |
| Management fees - stock based (Notes 8 and 10)                        |   |                                                | 374,667     |   |                                    |   | -          |                                              |   |   | 374,667                                |   |   |                                                                                    | -          |   |   |   | 2,030,667 |   |
| Professional fees                                                     |   |                                                | 152,571     |   |                                    |   | 50,617     |                                              |   |   | 254,950                                |   |   |                                                                                    | 108,019    |   |   |   | 870,599 |   |
| Travel and promotion                                                  |   |                                                | 23,638      |   |                                    |   | 263        |                                              |   |   | 48,545                                 |   |   |                                                                                    | 13,287     |   |   |   | 386,748 |   |
|                                                                  |   |                                                |        |   |                                    |   |       |                                              |   |   |                                   |   |   |                                                                                    |       |   |   |   |   |   |
| TOTAL EXPENSES                                                        |   |                                                | 1,587,379   |   |                                    |   | 377,520    |                                              |   |   | 2,307,414                              |   |   |                                                                                    | 873,069    |   |   |   | 12,172,017 |   |
|                                                                  |   |                                                |        |   |                                    |   |       |                                              |   |   |                                   |   |   |                                                                                    |       |   |   |   |   |   |
| LOSS BEFORE OTHER ITEMS                                               |   |                                                | (1,449,616  | )      |                                    |   | (253,287   | )                                                 |   |   | (2,086,718                             | )      |   |                                                                                    | (613,627   | ) |   |   | (9,686,210 | ) |
|                                                                  |   |                                                |        |   |                                    |   |       |                                              |   |   |                                   |   |   |                                                                                    |       |   |   |   |   |   |
| OTHER ITEMS                                                           |   |                                                |        |   |                                    |   |       |                                              |   |   |                                   |   |   |                                                                                    |       |   |   |   |   |   |
| Gain on debt settlement                                               |   |                                                | 8,364       |   |                                    |   | -          |                                              |   |   | 12,559                                 |   |   |                                                                                    | -          |   |   |   | 12,559 |   |
| Interest and other income                                             |   |                                                | 513         |   |                                    |   | 3,536      |                                              |   |   | 625                                    |   |   |                                                                                    | 3,754      |   |   |   | 8,913 |   |
| Foreign exchange                                                      |   |                                                | (4,565      | )      |                                    |   | -          |                                              |   |   | (38,093                                | )      |   |                                                                                    | -          |   |   |   | (17,166 | ) |
| Gain (loss) on derivative warrant liability                           |   |                                                | 680,739     |   |                                    |   | -          |                                              |   |   | (1,357,487                             | )      |   |                                                                                    | -          |   |   |   | (1,357,487 | ) |
|                                                                  |   |                                                |        |   |                                    |   |       |                                              |   |   |                                   |   |   |                                                                                    |       |   |   |   |   |   |
| NET LOSS FOR THE PERIOD                                               |   |                                                | (764,565    | )      |                                    |   | (249,751   | )                                                 |   |   | (3,469,114                             | )      |   |                                                                                    | (609,873   | ) |   |   | (11,039,391 | ) |
|                                                                  |   |                                                |        |   |                                    |   |       |                                              |   |   |                                   |   |   |                                                                                    |       |   |   |   |   |   |
| DEFICIT ACCUMULATED DURING THE EXPLORATION STAGE, BEGINNING OF PERIOD |   |                                                | (10,274,826 | )      |                                    |   | (5,147,896 | )                                                 |   |   | (7,570,277                             | )      |   |                                                                                    | (4,787,774 | ) |   |   | - |   |
|                                                                  |   |                                                |        |   |                                    |   |       |                                              |   |   |                                   |   |   |                                                                                    |       |   |   |   |   |   |
| DEFICIT ACCUMULATED DURING THE EXPLORATION STAGE, END OF PERIOD       |   | $                                                   | (11,039,391 | )      |                                    | $      | (5,397,647 | )                                                 |   | $      | (11,039,391                            | )      |   | $                                                                                       | (5,397,647 | ) |   | $ | (11,039,391 | ) |
|                                                                  |   |                                                |        |   |                                    |   |       |                                              |   |   |                                   |   |   |                                                                                    |       |   |   |   |   |   |
| NET LOSS PER SHARE, BASIC AND DILUTED                                 |   | $                                                   | (0.02       | )      |                                    | $      | (0.01      | )                                                 |   | $      | (0.09                                  | )      |   | $                                                                                       | (0.02      | ) |   |   |   |   |
|                                                                  |   |                                                |        |   |                                    |   |       |                                              |   |   |                                   |   |   |                                                                                    |       |   |   |   |   |   |
| WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING, BASIC AND DILUTED      |   |                                                | 47,761,124  |   |                                    |   | 28,610,350 |                                              |   |   | 39,872,984                             |   |   |                                                                                    | 28,423,004 |   |   |   |   |   |

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|                                                                     |   | Six Months Ended January 31, 2010 (Restated) |       |   | Six Months Ended January 31, 2009 |   |     | For the Period From April 12, 2005 (inception) to January 31, 2010 (Restated) |   |
|--------------------------------------------------------------------------|--------|---------------------------------------------------|------------|--------|----------------------------------------|--------|----------|-----------------------------------------------------------------------------------------|--------|
|                                                                     |   |                                              |       |   |                                   |   |     |                                                                                    |   |
| CASH FLOWS FROM OPERATING ACTIVITIES                                     |   |                                              |       |   |                                   |   |     |                                                                                    |   |
| Net loss for the period                                                  |   | $                                                 | (3,469,114 | )      |                                   | $      | (609,873 | )                                                                                       |   | $ | (11,039,391 | ) |
| Adjustments to reconcile net loss to net cash from operating activities: |   |                                              |       |   |                                   |   |     |                                                                                    |   |   |   |   |
| Depreciation and depletion                                               |   |                                              | 39,701     |   |                                   |   | 27,237   |                                                                                    |   |   | 251,168 |   |
| Impairment of oil and gas properties                                     |   |                                              | -          |   |                                   |   | 3,700    |                                                                                    |   |   | 233,306 |   |
| Non-cash interest and financing charges                                  |   |                                              | 77,958     |   |                                   |   | -        |                                                                                    |   |   | 141,342 |   |
| Stock based compensation                                                 |   |                                              | 873,171    |   |                                   |   | 11,111   |                                                                                    |   |   | 4,100,576 |   |
| Loss on derivative warrant liability                                     |   |                                              | 1,357,487  |   |                                   |   | -        |                                                                                    |   |   | 1,357,487 |   |
| Gain on debt settlement                                                  |   |                                              | (12,559    | )      |                                   |   | -        |                                                                                    |   |   | (12,559 | ) |
| Write-off of reclamation bond                                            |   |                                              | -          |   |                                   |   | -        |                                                                                    |   |   | 21,875 |   |
| Changes in operating assets and liabilities:                             |   |                                              |       |   |                                   |   |     |                                                                                    |   |   |   |   |
| Accounts receivable                                                      |   |                                              | (65,674    | )      |                                   |   | 178,279  |                                                                                    |   |   | (100,747 | ) |
| Prepaid expenses and deposits                                            |   |                                              | (30,816    | )      |                                   |   | (78,359  | )                                                                                       |   |   | (32,016 | ) |
| Accounts payable and accrued liabilities                                 |   |                                              | (139,028   | )      |                                   |   | 45,777   |                                                                                    |   |   | 352,064 |   |
| Due to related parties                                                   |   |                                              | (101,031   | )      |                                   |   | -        |                                                                                    |   |   | (101,031 | ) |
|                                                                     |   |                                              |       |   |                                   |   |     |                                                                                    |   |   |   |   |
| NET CASH FLOWS USED IN OPERATING ACTIVITIES                              |   |                                              | (1,469,885 | )      |                                   |   | (422,128 | )                                                                                       |   |   | (4,827,926 | ) |
|                                                                     |   |                                              |       |   |                                   |   |     |                                                                                    |   |   |   |   |
| CASH FLOWS FROM FINANCING ACTIVITIES                                     |   |                                              |       |   |                                   |   |     |                                                                                    |   |   |   |   |
| Issuance of shares for cash, net of share issuance costs                 |   |                                              | 2,858,862  |   |                                   |   | 469,900  |                                                                                    |   |   | 7,428,059 |   |
| Proceeds from sales of derivative warrants                               |   |                                              | -          |   |                                   |   | -        |                                                                                    |   |   | - |   |
| Proceeds from convertible notes                                          |   |                                              | -          |   |                                   |   | -        |                                                                                    |   |   | 150,000 |   |
| Advances from and repayments to related parties                          |   |                                              | (46,500    | )      |                                   |   | 7,277    |                                                                                    |   |   | 426,650 |   |
|                                                                     |   |                                              |       |   |                                   |   |     |                                                                                    |   |   |   |   |
| NET CASH FLOWS PROVIDED BY FINANCING ACTIVITIES                          |   |                                              | 2,812,362  |   |                                   |   | 477,177  |                                                                                    |   |   | 8,004,709 |   |
|                                                                     |   |                                              |       |   |                                   |   |     |                                                                                    |   |   |   |   |
| CASH FLOWS FROM INVESTING ACTIVITIES                                     |   |                                              |       |   |                                   |   |     |                                                                                    |   |   |   |   |
| Acquisition of oil and gas properties, net of cost recoveries            |   |                                              | (219,589   | )      |                                   |   | (104,447 | )                                                                                       |   |   | (1,888,714 | ) |
| Purchase of equipment                                                    |   |                                              | (48,302    | )      |                                   |   | -        |                                                                                    |   |   | (113,498 | ) |
| Reclamation bonds                                                        |   |                                              | -          |   |                                   |   | -        |                                                                                    |   |   | (81,192 | ) |
|                                                                     |   |                                              |       |   |                                   |   |     |                                                                                    |   |   |   |   |
| NET CASH FLOWS USED IN INVESTING ACTIVITIES                              |   |                                              | (267,891   | )      |                                   |   | (104,447 | )                                                                                       |   |   | (2,083,404 | ) |
|                                                                     |   |                                              |       |   |                                   |   |     |                                                                                    |   |   |   |   |
| INCREASE IN CASH                                                         |   |                                              | 1,074,586  |   |                                   |   | (49,398  | )                                                                                       |   |   | 1,093,379 |   |
|                                                                     |   |                                              |       |   |                                   |   |     |                                                                                    |   |   |   |   |
| CASH, BEGINNING                                                          |   |                                              | 18,793     |   |                                   |   | 67,650   |                                                                                    |   |   | - |   |
|                                                                     |   |                                              |       |   |                                   |   |     |                                                                                    |   |   |   |   |
| CASH, ENDING                                                             |   | $                                                 | 1,093,379  |   |                                   | $      | 18,252   |                                                                                    |   | $ | 1,093,379 |   |

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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. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------|

|                         |   | Carrying                                 |      |   | Fair Value Measurement at January 31, 2010 |   |
|------------------------------|--------|------------------------------------------|-----------|--------|-------------------------------------------------|--------|
|                         |   | Value at January 31, 2010 |      |   | Level 1                                         |   |   | Level 2 |   |   | Level 3 |   |
|                         |   |                                     |      |   |                                            |   |   |   |   |   |   |   |
| Derivative warrant liability |   | $                                        | 4,739,506 |   |                                            |   | - |   |   |   | - |   |   | $ | 4,739,506 |   |

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| Beginning balance – July 31, 2009      |   | $      | -         |   |
|----------------------------------------------|--------|--------|-----------|--------|
| Issuance of derivative warrants              |   |   | 3,382,019 |   |
| Reduced for warrants exercised               |   |   | -         |   |
| Change in fair value of derivative liability |   |   | 1,357,487 |   |
| At January 31, 2010                          |   | $      | 4,739,506 |   |
|                                         |   |   |      |   |

|   | 1. | In October and November 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: Derivative warrant liability for further details. |
|--------|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 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. |
|--------|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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Table of Contents

|                                 |   | As reported |        |   | Adjustment |   |       | As restated |   |
|--------------------------------------|--------|-------------|-------------|--------|------------|--------|------------|-------------|--------|
| Warrant derivative liability         |   | $           | -           |   |       | $      | 4,739,506  |        |   | $ | 4,739,506 |   |
| Total current liabilities            |   | $           | 198,839     |   |       | $      | 4,739,506  |        |   | $ | 4,938,345 |   |
| TOTAL LIABILITIES                    |   | $           | 221,884     |   |       | $      | 4,739,506  |        |   | $ | 4,961,390 |   |
| Additional paid-in capital           |   | $           | 12,431,938  |   |       | $      | (3,729,939 | )           |   | $ | 8,701,999 |   |
| Accumulated deficit                  |   |        | (10,029,824 | )      |       |   | (1,009,567 | )           |   |   | (11,039,391 | ) |
| TOTAL STOCKHOLDERS' EQUITY (DEFICIT) |   | $           | 2,604,358   |   |       | $      | (4,739,506 | )           |   | $ | (2,135,148 | ) |

|                                                                  |   | As reported |        |   | Adjustment |   |       | As restated |   |
|-----------------------------------------------------------------------|--------|-------------|-------------|--------|------------|--------|------------|-------------|--------|
| Consulting fees                                                       |   | $           | 310,269     |   |       | $      | 13,157     |        |   | $ | 323,426 |   |
| Total expenses                                                        |   | $           | 1,574,222   |   |       | $      | 13,157     |        |   | $ | 1,587,379 |   |
| Loss before other items                                               |   | $           | (1,436,459  | )      |       | $      | (13,157    | )           |   | $ | (1,449,616 |   |
| Gain on warrant derivative liability                                  |   | $           | -           |   |       | $      | 680,739    |        |   | $ | 680,739 |   |
| NET LOSS FOR THE PERIOD                                               |   | $           | (1,432,147  | )      |       | $      | 667,582    |        |   | $ | (764,565 | ) |
| DEFICIT ACCUMULATED DURING THE EXPLORATION STAGE, BEGINNING OF PERIOD |   | $           | (8,597,677  | )      |       | $      | (1,677,149 | )           |   | $ | (10,274,826 | ) |
| DEFICIT ACCUMULATED DURING THE EXPLORATION STAGE, END OF PERIOD       |   | $           | (10,029,824 | )      |       | $      | (1,009,567 | )           |   | $ | (11,039,391 | ) |
| BASIC AND DILUTED LOSS PER SHARE                                      |   | $           | (0.03       | )      |       | $      | 0.01       |        |   | $ | (0.02 | ) |

|                                                            |   | As reported |        |   | Adjustment |   |       | As restated |   |
|-----------------------------------------------------------------|--------|-------------|-------------|--------|------------|--------|------------|-------------|--------|
| Consulting fees                                                 |   | $           | 485,347     |   |       | $      | 13,157     |        |   | $ | 498,504 |   |
| Interest and financing charges                                  |   | $           | 463,243     |   |       | $      | (361,077   | )           |   | $ | 102,166 |   |
| Total expenses                                                  |   | $           | 2,655,334   |   |       | $      | (347,920   | )           |   | $ | 2,307,414 |   |
| Loss before other items                                         |   | $           | (2,434,638  | )      |       | $      | 347,920    |        |   | $ | (2,086,718 | ) |
| Loss on warrant derivative liability                            |   | $           | -           |   |       | $      | (1,357,487 | )           |   | $ | (1,357,487 | ) |
| NET LOSS FOR THE PERIOD                                         |   | $           | (2,459,547  | )      |       | $      | (1,009,567 | )           |   | $ | (3,469,114 | ) |
| DEFICIT ACCUMULATED DURING THE EXPLORATION STAGE, END OF PERIOD |   | $           | (10,029,824 | )      |       | $      | (1,009,567 | )           |   | $ | (11,039,391 | ) |
| BASIC AND DILUTED LOSS PER SHARE                                |   | $           | (0.06       | )      |       | $      | (0.03      | )           |   | $ | (0.09 | ) |

|                                 |   | As reported |        |   | Adjustment |   |       | As restated |   |
|--------------------------------------|--------|-------------|-------------|--------|------------|--------|------------|-------------|--------|
| Consulting fees                      |   | $           | 2,056,752   |   |       | $      | 13,157     |        |   | $ | 2,069,909 |   |
| Interest and financing charges       |   | $           | 528,229     |   |       | $      | (361,077   | )           |   | $ | 167,152 |   |
| Total expenses                       |   | $           | 12,519,937  |   |       | $      | (347,920   | )           |   | $ | 12,172,017 |   |
| Loss before other items              |   | $           | (10,034,130 | )      |       | $      | 347,920    |        |   | $ | (9,686,210 | ) |
| Loss on warrant derivative liability |   | $           | -           |   |       | $      | (1,357,487 | )           |   | $ | (1,357,487 | ) |
| NET LOSS FOR THE PERIOD              |   | $           | (10,029,824 | )      |       | $      | (1,009,567 | )           |   | $ | (11,039,391 | ) |

|                                    |   | As reported |       |   | Adjustment |   |       | As restated |   |
|-----------------------------------------|--------|-------------|------------|--------|------------|--------|------------|-------------|--------|
| Net loss                                |   | $           | (2,459,547 | )      |       | $      | (1,009,567 | )           |   | $ | (3,469,114 | ) |
| Non cash interest and financing charges |   | $           | 439,035    |   |       | $      | (361,077   | )           |   | $ | 77,958 |   |
| Stock based compensation                |   | $           | 860,014    |   |       |   | 13,157     |        |   |   | 873,171 |   |
| Loss on warrant liability               |   | $           | -          |   |       | $      | 1,357,487  |        |   | $ | 1,357,487 |   |

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|                     |   | January 31, 2010 |    |   | 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     |   |                  | 87,959  |   |               |   | 40,950 |   |
|                     |   |                  |    |   |               |   |   |   |
|                     |   |                  | 113,498 |   |               |   | 65,196 |   |
| Accumulated depreciation |   |                  | (43,135 | )      |               |   | (35,366 | ) |
|                     |   |                  |    |   |               |   |   |   |
|                     |   | $                     | 70,363  |   |               | $      | 29,830 |   |

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|                               |   | January 31, 2010 |      |   | July 31, 2009 |   |
|------------------------------------|--------|-----------------------|-----------|--------|--------------------|--------|
|                               |   |                  |      |   |               |   |
| PROVED PROPERTIES                  |   |                  |      |   |               |   |
| Barge Canal                        |   | $                     | 663,920   |   |               | $      | 593,767 |   |
| South Delhi / Big Creek Field      |   |                  | 347,017   |   |               |   | 346,787 |   |
| Impaired properties                |   |                  | 220,635   |   |               |   | 222,473 |   |
|                               |   |                  |      |   |               |   |   |   |
|                               |   |                  | 1,231,572 |   |               |   | 1,163,027 |   |
|                               |   |                  |      |   |               |   |   |   |
| Accumulated depletion              |   |                  | (208,033  | )      |               |   | (176,101 | ) |
|                               |   |                  |      |   |               |   |   |   |
|                               |   |                  | 1,023,539 |   |               |   | 986,926 |   |
|                               |   |                  |      |   |               |   |   |   |
| UNPROVED OR UNEVALUATED PROPERTIES |   |                  |      |   |               |   |   |   |
| Janssen Lease                      |   |                  | 20,000    |   |               |   | 20,000 |   |
| Illinois prospects                 |   |                  | 165,955   |   |               |   | 164,272 |   |
| Louisiana prospects                |   |                  | 43,265    |   |               |   | 22,944 |   |
| Texas prospects                    |   |                  | 217,661   |   |               |   | 88,238 |   |
|                               |   |                  |      |   |               |   |   |   |
|                               |   |                  | 446,881   |   |               |   | 295,454 |   |
|                               |   |                  |      |   |               |   |   |   |
|                               |   | $                     | 1,470,420 |   |               | $      | 1,282,380 |   |

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|                          |   | January 31, 2010 |      |   | July 31, 2009 |   |
|-------------------------------|--------|-----------------------|-----------|--------|--------------------|--------|
|                          |   |                  |      |   |               |   |
| ACQUISITION COSTS             |   |                  |      |   |               |   |
| Barge Canal                   |   | $                     | 642,456   |   |               | $      | 572,456 |   |
| Janssen Lease                 |   |                  | 20,000    |   |               |   | 20,000 |   |
| South Delhi / Big Creek Field |   |                  | 290,290   |   |               |   | 290,290 |   |
| Illinois prospects            |   |                  | 165,955   |   |               |   | 164,272 |   |
| Louisiana prospects           |   |                  | 22,902    |   |               |   | 22,944 |   |
| Texas prospects               |   |                  | 217,586   |   |               |   | 88,238 |   |
| Impaired acquisition costs    |   |                  | 99,948    |   |               |   | 101,786 |   |
|                          |   |                  |      |   |               |   |   |   |
|                          |   |                  | 1,459,137 |   |               |   | 1,259,986 |   |
|                          |   |                  |      |   |               |   |   |   |
| DEVELOPMENT COSTS             |   |                  |      |   |               |   |   |   |
| Barge Canal                   |   |                  | 12,246    |   |               |   | 12,246 |   |
| South Delhi / Big Creek Field |   |                  | 42,900    |   |               |   | 42,900 |   |
| Louisiana prospects           |   |                  | 5,875     |   |               |   | - |   |
|                          |   |                  |      |   |               |   |   |   |
|                          |   |                  | 61,021    |   |               |   | 55,146 |   |
|                          |   |                  |      |   |               |   |   |   |
| EXPLORATION COSTS             |   |                  |      |   |               |   |   |   |
| Louisiana prospects           |   |                  | 14,488    |   |               |   | - |   |
| Texas prospects               |   |                  | 75        |   |               |   | - |   |
| Impaired exploration costs    |   |                  | 120,687   |   |               |   | 120,687 |   |
|                          |   |                  |      |   |               |   |   |   |
|                          |   |                  | 135,250   |   |               |   | 120,687 |   |
|                          |   |                  |      |   |               |   |   |   |
| RETIREMENT OBLIGATIONS        |   |                  |      |   |               |   |   |   |
| Barge Canal                   |   |                  | 9,218     |   |               |   | 9,065 |   |
| South Delhi / Big Creek Field |   |                  | 13,827    |   |               |   | 13,597 |   |
|                          |   |                  |      |   |               |   |   |   |
|                          |   |                  | 23,045    |   |               |   | 22,662 |   |
|                          |   |                  |      |   |               |   |   |   |
|                          |   | $                     | 1,678,453 |   |               | $      | 1,458,481 |   |

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| Beginning balance – July 31, 2009      |   | $      | -         |   |
|----------------------------------------------|--------|--------|-----------|--------|
| Issuance of derivative warrants              |   |   | 3,382,019 |   |
| Reduced for warrants exercised               |   |   | -         |   |
| Change in fair value of derivative liability |   |   | 1,357,487 |   |
| At January 31, 2010                          |   | $      | 4,739,506 |   |
|                                         |   |   |      |   |

|   | a. | recorded production revenues of $133,789 (2009 - $186,005) and incurred production costs of $70,194 (2009 - $74,120) for the Barge Canal property which is operated by a company controlled by an officer of the Company; |
|--------|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | b. | incurred $268,843 (2009 - $171,744) in management fees paid to directors and officers during the period, and incurred $374,667 (2009 - $Nil) in stock based compensation for the incremental fair value of options granted to directors and officers that were earned during the period; |
|--------|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | c. | repaid a $44,000 promissory note issued to an officer of the Company, and incurred $1,434 (2009 - $4,500) in interest and finance charges; |
|--------|----|--------------------------------------------------------------------------------------------------------------------------------------------|

|   | d. | repaid a $25,000 promissory note issued to a director of the Company, and incurred $752 (2009 - $2,268) in interest and finance charges; |
|--------|----|------------------------------------------------------------------------------------------------------------------------------------------|

|   | e. | repaid a $100,000 promissory note issued to a direct family member of an officer and a director of the Company, and incurred $3,008 (2009 - $Nil) in interest and finance charges; |
|--------|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | f. | repaid a $27,500 promissory note issued to an officer of the Company, and incurred $1,098 (2009 - $Nil) in interest and finance charges; |
|--------|----|------------------------------------------------------------------------------------------------------------------------------------------|

|   | g. | repaid a $18,500 promissory note issued to a director of the Company, and incurred $760 (2009 - $Nil) in interest and finance charges; and |
|--------|----|--------------------------------------------------------------------------------------------------------------------------------------------|

|   | h. | incurred $1,817 (2009 - $Nil) in interest and finance charges on a $100,000 promissory note to a direct family member of an officer and a director that was issued and repaid during the six months ended January 31, 2010 (refer to Note 6). |
|--------|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|                          |   | January 31, 2010 |   |   | July 31, 2009 |   |
|-------------------------------|--------|-----------------------|--------|--------|--------------------|--------|
|                          |   |                  |   |   |               |   |
| BARGE CANAL                   |   |                  |   |   |               |   |
| Opening balance               |   | $                     | 9,065  |   |               | $      | 10,722 |   |
| Revisions                     |   |                  | -      |   |               |   | (1,956 | ) |
| Accretion expense             |   |                  | 153    |   |               |   | 299 |   |
|                          |   |                  |   |   |               |   |   |   |
|                          |   |                  | 9,218  |   |               |   | 9,065 |   |
|                          |   |                  |   |   |               |   |   |   |
| SOUTH DELHI / BIG CREEK FIELD |   |                  |   |   |               |   |   |   |
| Opening balance               |   |                  | 13,597 |   |               |   | 4,643 |   |
| Revisions                     |   |                  | -      |   |               |   | 8,505 |   |
| Accretion expense             |   |                  | 230    |   |               |   | 449 |   |
|                          |   |                  |   |   |               |   |   |   |
|                          |   |                  | 13,827 |   |               |   | 13,597 |   |
|                          |   |                  |   |   |               |   |   |   |
|                          |   | $                     | 23,045 |   |               | $      | 22,662 |   |

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Table of Contents

|                    |   | 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 |   |

|                      |   | 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                    |   |               | 20,146,998 |   |                            |   | 0.35   |                                    |   |   | 5.00 |   |
| Cancelled or expired      |   |               | -          |   |                            |   | -      |                                    |   |   | - |   |
|                      |   |               |       |   |                            |   |   |                                    |   |   |   |   |
| BALANCE, JANUARY 31, 2010 |   |               | 26,507,277 |   |                            | $      | 0.49   |                                    |   |   | 3.61 |   |

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|                      |   | 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                    |   |              | 2,600,000 |   |                            |   | 0.20   |                                    |   |   | 10.00 |   |
|                      |   |              |      |   |                            |   |   |                                    |   |   |   |   |
| BALANCE, JANUARY 31, 2010 |   |              | 9,130,000 |   |                            | $      | 0.30   |                                    |   |   | 8.28 |   |

|                       |   | 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 |   |
| Issued                     |   |             | 2,600,000 |   |                                   |   | 0.20 |   |
| Vested                     |   |             | (970,000  | )      |                                   |   | (0.25 | ) |
|                       |   |             |      |   |                                   |   |   |   |
| UNVESTED, JANUARY 31, 2010 |   |             | 2,590,000 |   |                                   | $      | 0.24 |   |

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|              |   | Six Months Ended January 31, |   |
|-------------------|--------|-----------------------------------|--------|
|              |   | 2010                              |   |   | 2009 |   |
|              |   |                              |   |   |   |   |
| Interest paid     |   | $                                 | -      |   |   | $ | - |   |
| Income taxes paid |   | $                                 | -      |   |   | $ | - |   |

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Ite

|                |   | Gross Acres |     |   | Net Acres (*) |   |
|---------------------|--------|-------------|----------|--------|---------------|--------|
|                |   |        |     |   |          |   |
| DEVELOPED ACREAGE   |   |        |     |   |          |   |
| Louisiana           |   |        | 175.89   |   |          |   | 131.92 |   |
| Texas               |   |        | 219.00   |   |          |   | 85.14 |   |
|                |   |        |     |   |          |   |   |   |
| UNDEVELOPED ACREAGE |   |        |     |   |          |   |   |   |
| Illinois            |   |        | 3,335.43 |   |          |   | 3,335.43 |   |
| Louisiana           |   |        | 160.00   |   |          |   | 150.08 |   |
| Texas               |   |        | 1,345.72 |   |          |   | 1,182.84 |   |
|                |   |        |     |   |          |   |   |   |
|                |   |        | 5,236.04 |   |          |   | 4,885.41 |   |

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

|                        |   | Six Months Ended January 31, 2010 |   |   | Six Months Ended January 31, 2009 |   |   | Period from Inception to January 31, 2010 |   |
|-----------------------------|--------|----------------------------------------|--------|--------|----------------------------------------|--------|--------|------------------------------------------------|--------|
|                        |   |                                   |   |   |                                   |   |   |                                           |   |
| PRODUCTION DATA             |   |                                   |   |   |                                   |   |   |                                           |   |
| Oil (MBbls)                 |   |                                   | 2.5    |   |                                   |   | 2.6    |                                           |   |   | 28.5 |   |
| Natural gas (MMcf)          |   |                                   | 7.6    |   |                                   |   | 6.0    |                                           |   |   | 54.8 |   |
|                        |   |                                   |   |   |                                   |   |   |                                           |   |   |   |   |
| Total (MMcfe)               |   |                                   | 23.0   |   |                                   |   | 22.1   |                                           |   |   | 226.1 |   |
|                        |   |                                   |   |   |                                   |   |   |                                           |   |   |   |   |
| AVERAGE PRICES              |   |                                   |   |   |                                   |   |   |                                           |   |   |   |   |
| Oil (per Bbl)               |   | $                                      | 70.33  |   |                                   | $      | 80.16  |                                           |   | $ | 75.61 |   |
| Natural gas (per Mcf)       |   | $                                      | 3.41   |   |                                   | $      | 6.94   |                                           |   | $ | 5.63 |   |
|                        |   |                                   |   |   |                                   |   |   |                                           |   |   |   |   |
| Total (per Mcfe)            |   | $                                      | 9.01   |   |                                   | $      | 11.61  |                                           |   | $ | 10.91 |   |
|                        |   |                                   |   |   |                                   |   |   |                                           |   |   |   |   |
| AVERAGE COSTSs (per Mcfe)   |   |                                   |   |   |                                   |   |   |                                           |   |   |   |   |
| Lease operating expenses(*) |   | $                                      | 8.87   |   |                                   | $      | 7.89   |                                           |   | $ | 5.57 |   |
| Production tax expense      |   | $                                      | 0.44   |   |                                   | $      | 0.75   |                                           |   | $ | 0.31 |   |

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|                                 |   | Three Months Ended January 31, 2010 (As reported) |       |   | Three Months Ended January 31, 2010 (As restated) |   |       | Three Months Ended January 31, 2009 |   |
|--------------------------------------|--------|--------------------------------------------------------|------------|--------|--------------------------------------------------------|--------|------------|------------------------------------------|--------|
|                                 |   |                                                   |       |   |                                                   |   |       |                                     |   |
| OIL AND GAS REVENUES                 |   | $                                                      | 137,763    |   |                                                   | $      | 137,763    |                                     |   | $ | 124,233 |   |
|                                 |   |                                                   |       |   |                                                   |   |       |                                     |   |   |   |   |
| EXPENSES                             |   |                                                   |       |   |                                                   |   |       |                                     |   |   |   |   |
| Consulting fees                      |   |                                                   | 277,845    |   |                                                   |   | 277,845    |                                     |   |   | 73,052 |   |
| Consulting fees - stock based        |   |                                                   | 310,269    |   |                                                   |   | 323,426    |                                     |   |   | 5,555 |   |
| Depreciation and depletion           |   |                                                   | 23,651     |   |                                                   |   | 23,651     |                                     |   |   | 17,310 |   |
| Direct operating costs               |   |                                                   | 161,702    |   |                                                   |   | 161,702    |                                     |   |   | 103,632 |   |
| General and administrative           |   |                                                   | 51,484     |   |                                                   |   | 51,484     |                                     |   |   | 32,410 |   |
| Impairment of properties             |   |                                                   | -          |   |                                                   |   | -          |                                     |   |   | 3,700 |   |
| Interest and financing charges       |   |                                                   | 32,098     |   |                                                   |   | 32,098     |                                     |   |   | 9,757 |   |
| Management fees                      |   |                                                   | 166,297    |   |                                                   |   | 166,297    |                                     |   |   | 81,224 |   |
| Management fees - stock based        |   |                                                   | 374,667    |   |                                                   |   | 374,667    |                                     |   |   | - |   |
| Professional fees                    |   |                                                   | 152,571    |   |                                                   |   | 152,571    |                                     |   |   | 50,617 |   |
| Travel and promotion                 |   |                                                   | 23,638     |   |                                                   |   | 23,638     |                                     |   |   | 263 |   |
|                                 |   |                                                   |       |   |                                                   |   |       |                                     |   |   |   |   |
| TOTAL EXPENSES                       |   |                                                   | 1,574,222  |   |                                                   |   | 1,587,379  |                                     |   |   | 377,520 |   |
|                                 |   |                                                   |       |   |                                                   |   |       |                                     |   |   |   |   |
| LOSS BEFORE OTHER ITEMS              |   |                                                   | (1,436,459 | )      |                                                   |   | (1,449,616 | )                                        |   |   | (253,287 | ) |
|                                 |   |                                                   |       |   |                                                   |   |       |                                     |   |   |   |   |
| OTHER ITEMS                          |   |                                                   |       |   |                                                   |   |       |                                     |   |   |   |   |
| Gain on debt settlement              |   |                                                   | 8,364      |   |                                                   |   | 8,364      |                                     |   |   | - |   |
| Interest and other income            |   |                                                   | 513        |   |                                                   |   | 513        |                                     |   |   | 3,536 |   |
| Foreign exchange                     |   |                                                   | (4,565     | )      |                                                   |   | (4,565     | )                                        |   |   | - |   |
| Gain on derivative warrant liability |   |                                                   | -          |   |                                                   |   | 680,739    |                                     |   |   | - |   |
|                                 |   |                                                   |       |   |                                                   |   |       |                                     |   |   |   |   |
| NET LOSS FOR THE PERIOD              |   | $                                                      | (1,432,147 | )      |                                                   | $      | (764,565   | )                                        |   | $ | (249,751 | ) |

|   | . | Barge Canal: Revenue from the Barge Canal project was $86,605 for the three months ended January 31, 2010 as compared to $87,215 in the prior period. Average sale prices for oil were 20% higher in the current period while average sale prices for natural gas (per Mcf) were 36% lower in the current period. Production decreased by 11% for oil and increased by 21% for natural gas from the prior period. The decrease in oil production resulted from unscheduled maintenance in the current period, while the increase in natural gas production resulted from flooding in the prior period. The market price of oil and gas increased slightly over the current period, and decreased significantly over prior period. |
|--------|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | . | South Delhi/Big Creek Field: Revenue from the South Delhi / Big Creek Field project was $49,930 for the three months ended January 31, 2010 as compared to $33,870 in the prior period. As with Barge Canal, average sale prices for oil were 20% higher in the current period. Production decreased by 5% from the prior period. The production changes were nominal as compared to the prior period, and the change in gross sales resulted from the differences and trend for average sale prices. The market price of oil and gas increased slightly over the current period, and decreased significantly over prior period. |
|--------|---|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | . | Janssen Lease: Revenue from the Janssen Lease project was $1,228 for the three months ended January 31, 2010 as compared to $3,148 in the prior period. As with Barge Canal and South Delhi/Big Creek Field, average sale prices for oil were 20% higher while average sale prices for natural gas (per Mcf) were 36% lower in the current period. Oil production was nominal in both the current and prior periods, and production for natural gas decreased by 46% from the prior period. The market price of oil and gas increased slightly over the current period, and decreased significantly over prior period. |
|--------|---|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | . | Consulting fees increased to $277,845 during the three months ended January 31, 2010 from $73,052 during the prior period, due primarily to additional technical consulting and corporate development in the current period. Market conditions in the prior period limited the scope and effectiveness of corporate development work. |
|--------|---|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | . | Consulting fees - stock based increased to $323,426, as restated, during the three months ended January 31, 2010 from $5,555 during the prior period. 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. |
|--------|---|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | . | Direct operating costs were $161,702 during the three months ended January 31, 2010 compared to $103,632 during the prior period. Significant developments or changes in direct operating costs per project are outlined as follows: |
|--------|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | i. | Barge Canal: Direct operating costs of $40,375 during the three months ended January 31, 2010 represented approximately 47% of gross production sales during the current period. Direct operating costs of $42,927 during the prior period represented approximately 49% of gross production sales. The current and prior period operating costs were relatively consistent throughout the quarter. |
|--------|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ii. | South Delhi/Big Creek Field: Direct operating costs of $119,945 for the three months ended January 31, 2010 represented approximately 240% of gross production sales during the current period. Direct operating costs of $59,185 during the prior period represented approximately 175% of gross production. Operating costs in the current period included significant maintenance to accommodate a gas injection project in the area. Operating costs in the prior period included planned and weather related maintenance charges. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | iii. | Janssen Lease: Direct operating costs of $1,382 for the three months ended January 31, 2010 represented approximately 113% of gross production sales during the current period. Direct operating costs of $1,520 during the prior period represented approximately 48% of gross production sales during the prior period. |
|--------|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | . | General and administrative costs increased to $51,484 during the three months ended January 31, 2010 from $32,410 during the prior period, due to significantly limited activity in the prior period due to market conditions. |
|--------|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | . | Interest and financing charges increased to $32,098, as restated, during the three months ended January 31, 2010 from $9,757 during the prior period. Interest and financing charges in the current period includes the accretion of the fair value of warrants issued with convertible debentures. Interest and financing charges in the prior period consisted of accrued interest on outstanding promissory notes. |
|--------|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | . | Management fees increased to $166,297 during the three months ended January 31, 2010 from $81,224 during the prior period. Some executive services vary from month to month based on activities and requirements of our company. Additionally, during the current period we added a new member to the executive team. |
|--------|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | . | Management fees - stock based increased to $374,667 during the three months ended January 31, 2010 from $Nil during the prior period. The current and prior period expense consists of the fair value of option grants issued to our officers and directors that were earned during the period. |
|--------|---|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | . | Professional fees increased to $152,571 during the three months ended January 31, 2010 from $50,617 during the prior period, due primarily to increases in legal services relating to corporate and business development during the current period. Market conditions in the prior period resulted in significantly limited activity. |
|--------|---|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | . | Travel and promotion increased to $23,638 during the three months ended January 31, 2010 from $263 during the prior period. As with other operating costs, market conditions during the prior period resulted in significantly limited activity which is reflected in comparatively lower expenditures. |
|--------|---|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                               |   | Six Months Ended January 31, 2010 (As reported) |       |   | Six Months Ended January 31, 2010 (As restated) |   |       | Six Months Ended January 31, 2009 |   |
|------------------------------------|--------|------------------------------------------------------|------------|--------|------------------------------------------------------|--------|------------|----------------------------------------|--------|
|                               |   |                                                 |       |   |                                                 |   |       |                                   |   |
| OIL AND GAS REVENUES               |   | $                                                    | 220,696    |   |                                                 | $      | 220,696    |                                   |   | $ | 259,442 |   |
|                               |   |                                                 |       |   |                                                 |   |       |                                   |   |   |   |   |
| EXPENSES                           |   |                                                 |       |   |                                                 |   |       |                                   |   |   |   |   |
| Consulting fees                    |   |                                                 | 411,830    |   |                                                 |   | 411,830    |                                   |   |   | 244,444 |   |
| Consulting fees - stock based      |   |                                                 | 485,347    |   |                                                 |   | 498,504    |                                   |   |   | 11,111 |   |
| Depreciation and depletion         |   |                                                 | 39,701     |   |                                                 |   | 39,701     |                                   |   |   | 27,237 |   |
| Direct operating costs             |   |                                                 | 214,171    |   |                                                 |   | 214,171    |                                   |   |   | 190,792 |   |
| General and administrative         |   |                                                 | 94,037     |   |                                                 |   | 94,037     |                                   |   |   | 92,978 |   |
| Impairment of properties           |   |                                                 | -          |   |                                                 |   | -          |                                   |   |   | 3,700 |   |
| Interest and financing charges     |   |                                                 | 463,243    |   |                                                 |   | 102,166    |                                   |   |   | 9,757 |   |
| Management fees                    |   |                                                 | 268,843    |   |                                                 |   | 268,843    |                                   |   |   | 171,744 |   |
| Management fees - stock based      |   |                                                 | 375,667    |   |                                                 |   | 375,667    |                                   |   |   | - |   |
| Professional fees                  |   |                                                 | 254,950    |   |                                                 |   | 254,950    |                                   |   |   | 108,019 |   |
| Travel and promotion               |   |                                                 | 48,545     |   |                                                 |   | 48,545     |                                   |   |   | 13,287 |   |
|                               |   |                                                 |       |   |                                                 |   |       |                                   |   |   |   |   |
| TOTAL EXPENSES                     |   |                                                 | 2,655,334  |   |                                                 |   | 2,307,414  |                                   |   |   | 873,069 |   |
|                               |   |                                                 |       |   |                                                 |   |       |                                   |   |   |   |   |
| LOSS BEFORE OTHER ITEMS            |   |                                                 | (2,434,638 | )      |                                                 |   | (2,086,718 | )                                      |   |   | (613,627 | ) |
|                               |   |                                                 |       |   |                                                 |   |       |                                   |   |   |   |   |
| OTHER ITEMS                        |   |                                                 |       |   |                                                 |   |       |                                   |   |   |   |   |
| Gain on debt settlement            |   |                                                 | 12,559     |   |                                                 |   | 12,559     |                                   |   |   | - |   |
| Interest and other income          |   |                                                 | 625        |   |                                                 |   | 625        |                                   |   |   | 3,754 |   |
| Foreign exchange                   |   |                                                 | (38,093    | )      |                                                 |   | (38,093    | )                                      |   |   | - |   |
| Gain (loss) on derivative warrants |   |                                                 | -          |   |                                                 |   | (1,357,487 | )                                      |   |   | - |   |
|                               |   |                                                 |       |   |                                                 |   |       |                                   |   |   |   |   |
| NET LOSS FOR THE PERIOD            |   | $                                                    | (2,459,547 | )      |                                                 | $      | (3,469,114 | )                                      |   | $ | (609,873 | ) |

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|   | . | Barge Canal: Revenue from the Barge Canal project was $133,789 for the six months ended January 31, 2010 as compared to $186,005 in the prior period. Average sale prices for oil were 12% lower in the current period while average sale prices for natural gas (per Mcf) were 51% lower in the current period. Production decreased by 16% for oil and increased by 36% for natural gas from the prior period. The decrease in oil production resulted from unscheduled maintenance in the current period, while the increase in natural gas production resulted from flooding in the prior period. The market price of oil and gas increased slightly over the current period, and decreased significantly over prior period. |
|--------|---|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | . | South Delhi/Big Creek Field: Revenue from the South Delhi / Big Creek Field project was $84,673 for the six months ended January 31, 2010 as compared to $65,125 in the prior period. As with Barge Canal, average sale prices for oil were 12% lower in the current period. Production increased by 24% from the prior period resulting from significant maintenance downtime in the prior period. The market price of oil and gas increased slightly over the current period, and decreased significantly over prior period. |
|--------|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | . | Janssen Lease: Revenue from the Janssen Lease project was $2,234 for the six months ended January 31, 2010 as compared to $8,312 in the prior period. As with Barge Canal and South Delhi/Big Creek Field, average sale prices for oil were 12% lower while average sale prices for natural gas (per Mcf) were 51% lower in the current period. Oil production was nominal in both the current and prior periods, and production for natural gas decreased by 45% from the prior period. The market price of oil and gas increased slightly over the current period, and decreased significantly over prior period. |
|--------|---|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | . | Consulting fees increased to $411,830 during the six months ended January 31, 2010 from $244,444 during the prior period, due primarily to additional technical consulting and corporate development in the current period. Market conditions in the prior period limited the scope and effectiveness of corporate development work. |
|--------|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | . | Consulting fees - stock based increased to $498,504 as restated during the six months ended January 31, 2010 from $11,111 during the prior period. 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. |
|--------|---|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | . | Direct operating costs were $214,171 during the six months ended January 31, 2010 compared to $190,792 during the prior period. Significant developments or changes in direct operating costs per project are outlined as follows: |
|--------|---|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | iv. | Barge Canal: Direct operating costs of $70,194 during the six months ended January 31, 2010 represented approximately 52% of gross production sales during the current period. Direct operating costs of $74,120 during the prior period represented approximately 40% of gross production sales. The current period operating costs were a higher percentage of gross production sales than in the prior period due to unscheduled maintenance costs. |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | v. | South Delhi/Big Creek Field: Direct operating costs of $141,849 for the six months ended January 31, 2010 represented approximately 168% of gross production sales during the current period. Direct operating costs of $113,929 during the prior period represented approximately 175% of gross production. Operating costs in the current period included significant maintenance to accommodate a gas injection project in the area. Operating costs in the prior period included planned and weather related maintenance charges. |
|--------|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | vi. | Janssen Lease: Direct operating costs of $2,128 for the six months ended January 31, 2010 represented approximately 95% of gross production sales during the current period. Direct operating costs of $2,743 during the prior period represented approximately 33% of gross production sales during the prior period. |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | . | Interest and financing charges increased to $102,166 as restated during the six months ended January 31, 2010 from $9,757 during the prior period. Interest and financing charges in the current period includes accrued interest and the accretion of the fair value of warrants issued with convertible debentures. Interest and financing charges in the prior period consisted of accrued interest on outstanding promissory notes. |
|--------|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | . | Management fees increased to $268,843 during the six months ended January 31, 2010 from $171,744 during the prior period. Some executive services vary from month to month based on activities and requirements of our company. Additionally, during the current period we added a new member to the executive team. |
|--------|---|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | . | Management fees - stock based increased to $374,667 during the six months ended January 31, 2010 from $Nil during the prior period. The current and prior period expense consists of the fair value of option grants issued to our officers and directors that were earned during the period. |
|--------|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | . | Professional fees increased to $254,950 during the six months ended January 31, 2010 from $108,019 during the prior period, due primarily to increases in legal services relating to corporate and business development during the current period. Market conditions in the prior period resulted in significantly limited activity. |
|--------|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | . | Travel and promotion increased to $48,545 during the six months ended January 31, 2010 from $13,287 during the prior period. As with other operating costs, market conditions during the prior period resulted in significantly limited activity which is reflected in comparatively lower expenditures. |
|--------|---|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|                           |   | January 31, 2010(As reported) |      |   | January 31, 2010( As restated) |   |       | January 31, 2009 |   |
|--------------------------------|--------|------------------------------------|-----------|--------|-------------------------------------|--------|------------|-----------------------|--------|
|                           |   |                               |      |   |                                |   |       |                  |   |
| Cash and cash equivalents      |   | $                                  | 1,093,379 |   |                                | $      | 1,093,379  |                  |   | $ | 18,252 |   |
| Working capital (deficit)      |   |                               | 1,027,303 |   |                                |   | (3,712,203 | )                     |   |   | (306,659 | ) |
| Total assets                   |   |                               | 2,826,242 |   |                                |   | 2,826,242  |                  |   |   | 1,569,154 |   |
| Total liabilities              |   |                               | 221,884   |   |                                |   | 4,961,390  |                  |   |   | 471,511 |   |
| Shareholders' equity (deficit) |   |                               | 2,604,358 |   |                                |   | (2,135,148 | )                     |   |   | 1,097,643 |   |

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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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