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

                                   FORM 10-KSB/A

                                 AMENDMENT NO. 1

[X]   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
      ACT OF 1934

For the Fiscal Year Ended December 31, 2005       Commission File Number 0-49837

                           WESTSIDE ENERGY CORPORATION
                 (Name of small business issuer in its charter)

                                     Nevada
         (State or other jurisdiction of incorporation or organization)

                                   88-0349241
                      (I.R.S. Employer Identification No.)

                        4400 Post Oak Parkway Suite 2530
                                Houston, TX 77027
                                 (713) 979-2660
                       (Address, including zip code, and
                    telephone number, including area code, of
                    registrant's principal executive offices)

           Securities registered pursuant to Section 12(b) of the Act:

       Title of Each Class            Name of Each Exchange on which Registered

  Common Stock, $0.01 par value                 American Stock Exchange

Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or 15(d) of the Act. YES [ ]  NO [X]

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

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

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

The issuer's revenues for the fiscal year ended December 31, 2005 were $595,657.

The aggregate market value of the voting stock held by non-affiliates of the
registrant on March 24, 2006 was approximately $38,158,860, based on the closing
price of such stock on such date. The number of shares outstanding of the
registrant's Common Stock, par value $.01 per share, as of March 24, 2006 was
20,716,636.

Transitional Small Business Disclosure format (Check one): YES [ ]  NO [X]



                                       1
<PAGE>



               AMENDMENT NO. 1 TO THE ANNUAL REPORT ON FORM 10-KSB
                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 2005

                                EXPLANATORY NOTE

         We recently discovered that certain changes that we attempted to make
to the text of our Annual Report on Form 10-KSB for the fiscal year ended
December 31, 2005 (the "Annual Report") prior to the filing of the Annual Report
with the U.S. Securities and Exchange Commission (the "Commission") were not
reflected in the Annual Report actually filed with the Commission. We are filing
this Amendment No. 1 (the "Amendment") to our Annual Report to add these textual
changes, which were inadvertently omitted. With the exceptions noted below,
these textual changes were essentially grammatical and typographical in nature.
None of these changes relate to our financial statements or results of
operations. Notwithstanding the preceding, readers are advised to note the
following areas in the Amendment in which changes that go beyond grammatical and
typographical ones are reflected:

         1.       The risk  factor now  captioned  "OUR  RELIANCE  ON A NUMBER
                  OF THIRD  PARTIES  EXPOSES US TO A NUMBER OF RISKS;
                  PARTICULARLY  WE  CURRENTLY  RELY VERY  HEAVILY ON A SINGLE
                  PIPELINE  AND  PURCHASER  OF OUR GAS PRODUCTION"  contained in
                  ITEMS 1 and 2. BUSINESS AND  PROPERTIES - RISK FACTORS was
                  revised to note that in fiscal  2005 a single  pipeline
                  transported  and  single  purchaser  purchased  nearly all of
                  our gas production  (the  "Pipeline  and  Purchaser") and that
                  we expected to rely  heavily on the  Pipeline and Purchaser
                  for an  extended  period of time into the future.  Subsequent
                  to the end of fiscal  2005, in connection with the acquisition
                  of all of the  outstanding  equity  interests in EBS Oil and
                  Gas Partners Production  Company,  L.P. and  affiliates,  we
                  acquired an interest in a pipeline  system.  We no longer
                  believe that our  reliance on the  Pipeline and  Purchaser in
                  the future will be as great as expressed in the revised risk
                  factor. Such risk factor is being revised only to reflect what
                  we  originally  intended to file at the time the filing of the
                  Annual Report.

         2.       The section captioned "LIQUIDITY AND CAPITAL RESOURCES" in
                  ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS describes an
                  additional one and one-half percent (1.5%) overriding royalty
                  interest to which GasRock Capital LLC ("GasRock") is entitled
                  in certain wells and related units, in consideration of
                  GasRock's making advances under the $45 million senior secured
                  revolving credit facility that GasRock has made available to
                  us.

         3.       The section captioned "Tax Fees" in ITEM 14. PRINCIPAL
                  ACCOUNTANT FEES AND SERVICES describes comparatively small
                  amounts of fees that we paid to our auditors for tax services.

         This Form 10-KSB/A should be read in conjunction with our other filings
made with the U.S. Securities and Exchange Commission subsequent to the filing
of the original Annual Report, including any amendments to those filings. This
Form 10-KSB/A is not intended to update other information presented in the
Annual Report as originally filed.


<PAGE>



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

                                   FORM 10-KSB

[X]   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
      ACT OF 1934

For the Fiscal Year Ended December 31, 2005      Commission File Number 0-49837

                           WESTSIDE ENERGY CORPORATION
                 (Name of small business issuer in its charter)

                                     Nevada
         (State or other jurisdiction of incorporation or organization)

                                   88-0349241
                      (I.R.S. Employer Identification No.)

                        4400 Post Oak Parkway Suite 2530
                                Houston, TX 77027
                                 (713) 979-2660 (Address, including zip code,
                        and
                    telephone number, including area code, of
                    registrant's principal executive offices)

           Securities registered pursuant to Section 12(b) of the Act:

       Title of Each Class            Name of Each Exchange on which Registered

  Common Stock, $0.01 par value                 American Stock Exchange

Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or 15(d) of the Act. YES [ ]  NO [X]

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

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

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

The issuer's revenues for the fiscal year ended December 31, 2005 were 595,657.

The aggregate market value of the voting stock held by non-affiliates of the
registrant on March 24, 2006 was approximately $38,158,860, based on the closing
price of such stock on such date. The number of shares outstanding of the
registrant's Common Stock, par value $.01 per share, as of March 24, 2006 was
20,716,636.

Transitional Small Business Disclosure format (Check one): YES [ ]  NO [X]





                                      A-1
<PAGE>



                                      INDEX

                                                                   Page Number
                                     PART I.

Items 1. & 2.     Business and Properties.                                A-4

Item 3.           Legal Proceedings.                                      A-28

Item 4.           Submission of Matters to a Vote of Security Holders.    A-28

                                    PART II.

Item 5.           Market for the Registrant's Common Equity and
                  Related Stockholder Matters.                            A-29

Item 6.           Management's Discussion and Analysis.                   A-29

Item 7.           Financial Statements.                                   A-34

Item 8.           Changes in and Disagreements with Accountants on
                  Accounting and Financial Disclosure.                    A-34

Item 8A.          Controls and Procedures.                                A-34

                                    PART III.

Item 9.           Directors, Executive Officers, Promoters and Control
                  Persons; Compliance with Section 16(a) of the
                  Exchange Act.                                           A-36

Item 10.          Executive Compensation.                                 A-39

Item 11.          Security Ownership of Certain Beneficial Owners and
                  Management.                                             A-42

Item 12.          Certain Relationships and Related Transactions.         A-48

Item 13.          Exhibits and Reports on Form 8-K.                       A-49

Item 14.          Principal Accountant Fees and Services.                 A-51











                                       A-2
<PAGE>



                           Forward-Looking Statements

         This Annual Report on Form 10-KSB contains forward-looking statements
within the meaning of Section 24A of the Securities Act of 1933 and Section 21E
of the Securities Exchange Act of 1934. These statements appear in a number of
places including "ITEMS 1 AND 2 "BUSINESS AND PROPERTIES." These statements
regard:

        *  our belief regarding the attractiveness of our oil and gas properties
           for purposes of exploration;
        *  our intention and plan to perform risk assessments and due diligence
           reviews that we believe are consistent with industry practices of
           each project we decide to pursue;
        *  our belief regarding the possible rapid and significant expansion of
           our operations;
        *  our belief regarding the sufficiency of our current acreage for
           purposes of conducting our initial plan of drilling;
        *  our belief regarding the availability and qualifications of necessary
           third party service providers;
        *  our belief regarding the cost of identifying drill sites;
        *  our belief regarding our ability to enter into long-term sales
           contracts for our production;
        *  our belief regarding our permitted or permittable capacity to
           continue our operations if any regulatory agency requires us to
           forego construction, modification or operation of certain air
           emission sources;
        *  our belief regarding the effect of continued compliance with existing
           requirements of environmental laws and regulations;
        *  our expectations that we will be able to retain a promotional
           interest in prospects presented to other industry investors;
        *  our expectations regarding our use of employees and outside
           consultants;
        *  our plans as to how we will finance our business;
        *  our expectations regarding the costs of drilling our wells;
        *  our expectations regarding our ability to sell our production to
           purchasers and end-users at prevailing market prices and under
           arrangements that are usual and customary in the industry;
        *  our expectations regarding the effect of compliance with existing
           federal, state and local laws, rules and regulations governing the
           release of materials in the environment or otherwise relating to the
           protection of the environment; and
        *  our estimates regarding the length of time required drill, test and
           complete each well, and install the facilities to connect to
           gathering or facilities.

         Such statements can be identified by the use of forward-looking
terminology such as "believes," "expects," "may," "estimates," "will," "should,"
"plans" or "anticipates" or the negative thereof or other variations thereon or
comparable terminology, or by discussions of strategy. Readers are cautioned
that any such forward-looking statements are not guarantees of future
performance and involve significant risks and uncertainties, and that actual
results could differ materially from those projected in the forward-looking
statements. Factors that could cause actual results to differ materially
include, but are not limited to, those discussed under "RISK FACTORS"
hereinbelow. As a result, these forward-looking statements represent the
Company's judgment as of the date of this Annual Report. The Company does not
express any intent or obligation to update these forward-looking statements.

                                       A-3
<PAGE>

ITEMS 1 and 2.  BUSINESS AND PROPERTIES.

                                     GENERAL

         Westside Energy Corporation, f/n/a "Eventemp Corporation" (the
"Company"), was incorporated on November 30, 1995 under the laws of the State of
Nevada. In February 2004, the Company decided to focus its efforts on the
acquisition of attractive crude oil and natural gas prospects, and the
exploration, development and production of oil and gas on these prospects. The
Company is focusing its efforts initially in the State of Texas. For several
years prior to February 2004, the Company had been dormant from a business
perspective. The Company's major emphasis is participation in the oil and gas
segment, acquiring interests in producing oil and gas properties and
participating in drilling operations. The Company's principal products are crude
oil and natural gas. The Company is engaged in a broad range of activities
associated with the oil and gas business in an effort to develop oil and gas
reserves. With the assistance of the Company's management, independent
contractors retained from time to time by the Company, and, to a lesser extent,
unsolicited submissions, the Company intends to identify prospects that it
believes are suitable for acquisition and drilling.

         When the Company acquires an interest in acreage on which exploration
or development drilling is planned, the Company will assess the relative
potential and risks of each prospect and determine the degree to which the
Company will participate in exploration or development drilling. In the right
circumstances, the Company will assume the entire risk of the acquisition and
drilling. On the other hand, the Company may determine that it will be more
beneficial to invite industry participants to share the risk and the reward of
the prospect by financing some or all of the costs of drilling contemplated
wells. In such cases, the Company may retain a carried working interest, a
reversionary interest, or may be required to finance all or a portion of the
Company's proportional interest in the prospect. Although this approach will
reduce the Company's potential return should the drilling operations prove
successful, it will also reduce the Company's risk and financial commitment to a
particular prospect.

         Conversely, the Company may from time to time participate in drilling
prospects offered by other persons if the Company believes that the potential
benefit from the drilling operations outweighs the risk and the cost of the
proposed operations. This approach will allow the Company to diversify into a
larger number of prospects at a lower cost per prospect, but these operations
(commonly known as "farm-ins") are generally more expensive than operations
where the Company offers the participation to others (known as "farm-outs").

         In addition to its exploration and drilling activities, the Company
expects that it will attempt to accumulate additional oil and gas reserves
through the purchase of existing reserves from others. In this connection, the
Company may initiate workovers, recompletions, development drilling, secondary
and tertiary recovery operations and other production enhancement techniques to
maximize current production and the ultimate recovery of reserves acquired or
developed.

         There can be no assurance that the Company will be successful in its
exploratory and production activities. The oil and gas business involves
numerous risks. See "RISK FACTORS" below.

                                      A-4
<PAGE>

                                  RECENT EVENTS

         Since the change in the Company's business focus in February 2004, the
Company has undertaken a number of activities, including the following:

         *        The Company changed its corporate name to "Westside Energy
                  Corporation" on March 17, 2004.
         *        The Company has improved its corporate governance in several
                  ways including the expansion of the Company's Board of
                  Directors from one member to the current number of six
                  members, with three outside directors currently serving, all
                  of whom have extensive oil and gas experience.
         *        The Board of Directors has also created audit, compensation
                  and nominating committees on which only outside directors
                  serve.
         *        In addition to the creation of an audit committee, the Company
                  has improved internal controls over financial reporting by the
                  addition of a Controller to the Company's staff.
         *        The Board of Directors has also elected a new slate of
                  officers, including a Chief Executive Officer and a Chief
                  Operating Officer, both with considerable experience in the
                  oil & gas industry.
         *        Operationally, the Company acquired rights in a number of oil
                  and gas leases. As of December 31, 2005, the Company had
                  acquired total leased acreage of 67,981 gross acres and 63,521
                  net acres in various Texas counties in the Barnett Shale,
                  including Denton, Cooke, Montague, Hill, Ellis, Hamilton,
                  Comanche and Mills Counties.
         *        As of the date of this Annual Report, the Company has
                  completed or commenced work on a number of wells. For
                  additional information regarding these wells, see the table
                  captioned "STATUS OF SIGNIFICANT WELLS AS OF MARCH 24, 2006"
                  in the section captioned "ITEMS 1 and 2. BUSINESS AND
                  PROPERTIES - Properties."
         *        The Company completed several rounds of financings, including:
                  (a) the November 2004 sale of 10 million shares of the
                  Company's common stock in a private placement transaction
                  resulting in gross proceeds of $20 million and net proceeds to
                  the Company of approximately $18.5 million after offering
                  expenses and (b) the January 2006 sale of 3,278,000 shares of
                  the Company's common stock in a private placement transaction
                  resulting in gross proceeds of $10,325,700 and net proceeds to
                  the Company of approximately $9.5 million after offering
                  expenses.
         *        The Company's common stock has been listed and is now traded
                  on the American Stock Exchange.

         Most recently, the Company completed a major acquisition and a major
debt financing. For more information regarding the major acquisition, see "EBS
ACQUISITION" below. For more information regarding the major debt financing, see
"ITEM 6 MANAGEMENT'S DISCUSSION AND ANALYSIS - LIQUIDITY AND CAPITAL RESOURCES"
below.





                                       A-5
<PAGE>



                                 RISK FACTORS

         In addition to the other information in this Annual Report, the
following risk factors, among others, should be considered carefully in
evaluating the Company and its business.


                          Risks Related to our Company

         OUR LIMITED HISTORY MAKES AN EVALUATION OF US AND OUR FUTURE DIFFICULT,
AND PROFITS ARE NOT ASSURED.

         The Company was incorporated on November 30, 1995 for the purpose of
commercially exploiting a proprietary self-contained climate control system for
vehicles (known as the Etemp system) that allowed the user to call his or her
vehicle from any available telephone and pre-cool or pre-heat the interior of
the vehicle, within five minutes before arriving, with the engine turned off.
During February 2004, we decided to focus our business on the acquisition of
attractive crude oil and natural gas prospects, and the exploration, development
and production of oil and gas on these prospects. Since that time, we have
acquired rights in oil and gas properties and undertaken certain exploratory and
other activities. See "RECENT EVENTS" above. However, we do not have a long
operating history in our current business. Nearly all of the oil and gas
properties that we have leased to date are considered "undeveloped acreage,"
which the U.S. Securities and Exchange Commission (the "Commission") defines as
"lease acreage on which wells have not been drilled or completed to a point that
would permit the production of commercial quantities of oil and gas regardless
of whether such acreage contains proved reserves." We have established a limited
volume of proved reserves with regard to our properties. In view of our limited
history in the oil and gas business, you may have difficulty in evaluating us
and our business and prospects. You must consider our business and prospects in
light of the risks, expenses and difficulties frequently encountered by
companies in their early stage of development. For our business plan to succeed,
we must successfully undertake most of the following activities:

         *        Find and acquire rights in attractive oil and gas properties;
         *        Drill successful  exploratory  test wells on our oil and gas
                  properties to establish the presence of oil and gas in
                  commercially viable quantities;
         *        Develop our oil and gas properties, including the successful
                  application of advanced formation fracturing technologies and
                  procedures, to the point at which oil and gas are being
                  produced in commercially viable quantities;
         *        Contract with third party services providers regarding
                  services necessary to drill our oil and gas wells;
         *        Contract with transporters and purchasers of our commercial
                  production of oil and gas;
         *        Maintain access to funds to pursue our capital-intensive
                  business plan;
         *        Comply with all applicable laws and regulations;
         *        Identify and enter into binding agreements with suitable joint
                  venture partners for our future projects;
         *        Implement and successfully execute our business strategy;
         *        Respond to competitive developments and market changes; and
         *        Attract, retain and motivate qualified personnel.

There can be no assurance that we will be successful in undertaking such
activities. Our failure to undertake successfully most of the activities
described above could materially and adversely affect our business, prospects,
financial condition and results of operations. In addition, there can be no
assurance that our exploration and production activities will produce oil and
gas in commercially viable quantities. Moreover, we expect to incur operating
losses until such time (if ever) as we consistently produce and sell sufficient
volumes of our commercial production to cover direct production costs as well as
corporate overhead. There can be no assurance that sales of our oil and gas
production will ever generate sufficient revenues, that we will ever generate
positive cash flow from our operations or that (if ever attained) we will be
able to sustain profitability in any future period.

                                       A-6
<PAGE>

         THE ACQUISITION OF EBS COULD EXPOSE US TO NUMEROUS RISKS.

         On March 15, 2006, we purchased all of the outstanding equity interests
(the "Equity Interests") in EBS Oil and Gas Partners Production Company, L.P.
("EBS") and its affiliates. EBS was a privately held entity engaged in the
drilling and completion of wells on various oil and gas leases covering lands
located primarily in Cooke, Montague, and Wise Counties, Texas. The acquisition
of the Equity Interests and the business of EBS could be accompanied by the
risks commonly encountered in a transaction of this nature. Such risks include
the following:

         *        Difficulty of assimilating the operations and personnel of
                  EBS;
         *        Potential disruption of our ongoing business;
         *        Inability of management to maximize our financial and
                  strategic position  through  the  successful incorporation
                  of EBS;
         *        Additional expenses associated with amortization of acquired
                  assets;
         *        Maintenance of uniform standards, controls, procedures and
                  policies;
         *        Increased general and administrative expenses;
         *        Impairment of relationships with employees, customers, and
                  vendors as a result of any integration  related issues with
                  new management personnel; and
         * Potential unknown liabilities associated with EBS's business.

There can be no assurance that we would be successful in overcoming these risks
or any other problems encountered in connection with the acquisition of the
Equity Interests and the business of EBS. Due to all of the foregoing, the
acquisition of the Equity Interests and the business of EBS may materially and
adversely affect our business, results of operations, financial condition and
cash flows. In addition, we expect to issue shares of our stock as part of a
post-closing earn-out arrangement in connection with the acquisition of the
Equity Interests and the business of EBS. In such event, existing stockholders
will experience ownership dilution, the extent of which cannot now be
determined.

         WE RECENTLY ENTERED INTO A DEBT FINANCING ARRANGEMENT THAT COULD EXPOSE
US TO CERTAIN RISKS.

         In connection with the acquisition of all of the outstanding equity
interests (the "Equity Interests") in EBS Oil and Gas Partners Production
Company, L.P. and its affiliates (as discussed hereinabove), we entered into a
debt financing arrangement with GasRock Capital LLC (the "GasRock Financing").
For more information regarding the GarRock Financing, see "ITEM 6 MANAGEMENT'S
DISCUSSION AND ANALYSIS - LIQUIDITY AND CAPITAL RESOURCES" below. As of March
24, 2006, we had total indebtedness outstanding under the GasRock Financing of
approximately $5.3 million. The GasRock Financing is secured by certain of our
assets, and imposes on us restrictions limiting our operating flexibility.
Because this financing imposes on us regularly scheduled payments of interest,
it creates the possibility that the cash receipts from our operations will be
insufficient to meet the interest payments on this financing. In order for us to

                                       A-7
<PAGE>

make required payments on the GasRock Financing, we must maintain certain levels
of cash flow or else obtain alternative financing. Our ability to satisfy our
obligations under the GasRock financing depends upon our future performance,
which will be subject to prevailing economic conditions and to financial,
business and other factors, including factors beyond our control, affecting our
business operations. If our cash flow is ever insufficient to service this debt
and other operating costs, we will be required to use our cash reserves (if
any), seek additional funds, or suffer a foreclosure on certain of our
properties. A foreclosure could significantly reduce or eliminate our equity in
our properties, materially and adversely affect our business, results of
operations and financial condition, and cause us to cease operations and/or
force us into bankruptcy protection. In addition, the GasRock Financing involves
a "floating" interest rate. If interest rates increase substantially, the debt
servicing on the GasRock Financing will be significantly different than that
projected, which will impact our cash flow. The costs of borrowing (interest
charges and financing fees) may also significantly reduce profits and increase
losses resulting from our operations. No assurance can be given that future cash
flow will be sufficient to make the debt service payments on any borrowed funds
and also cover operating expenses.

         WE DEPEND ON CERTAIN KEY PERSONNEL.

         We substantially depend upon the efforts and skills of our current
management. The loss of the services of one or more members of our current
management, or the inability of one or more of them to devote sufficient
attention to our operations, could materially and adversely affect our
operations. We have not entered into a written employment agreement with Jimmy
D. Wright, our Chief Executive Officer. As a result, Mr. Wright may discontinue
providing his services to us at any time and for any reason, and even thereafter
commence competition with us. Moreover, we do not maintain key man life
insurance on any member of management, and we have not required any member of
management to enter into any covenant or agreement not to compete with us.

         OUR CURRENT MANAGEMENT RESOURCES MAY NOT BE SUFFICIENT FOR THE FUTURE,
AND WE HAVE NO ASSURANCE THAT WE CAN ATTRACT ADDITIONAL QUALIFIED PERSONNEL.

         There can be no assurance that the current level of management is
sufficient to perform all responsibilities necessary or beneficial for
management to perform. Our success in attracting additional qualified personnel
will depend on many factors, including our ability to provide them with
competitive compensation arrangements, equity participation and other benefits.
There is no assurance that (if we need to) we will be successful in attracting
highly qualified individuals in key management positions.

         LIMITATIONS ON CLAIMS AGAINST OUR OFFICERS AND DIRECTORS, AND OUR
OBLIGATION TO INDEMNIFY THEM, COULD PREVENT OUR RECOVERY OF LOSSES CAUSED BY
THEM.

         The corporation law of Nevada allows a Nevada corporation to limit the
liability of its directors to the corporation and its stockholders to a certain
extent, and our Restated Articles of Incorporation have eliminated our
directors' liability to the maximum extent permitted by the corporation law of
Nevada. Moreover, our Bylaws provide that we must indemnify each director,
officer, agent and/or employee to the maximum extent provided for by the
corporation law of Nevada. In addition, we recently entered into indemnification
agreements with our directors and key management personnel. Further, we may
purchase and maintain insurance on behalf of any such persons whether or not we
have the power to indemnify such person against the liability insured against.
Consequently, because of the actions or omissions of officers, directors, agents
and employees, we could incur substantial losses and be prevented from
recovering such losses from such persons. Further, the Commission maintains that
indemnification for liabilities arising under the Securities Act of 1933 is
against the public policy expressed in such act, and is therefore unenforceable.

                                       A-8
<PAGE>

         INCUMBENT MANAGEMENT OWNS A LARGE PERCENTAGE OF OUR OUTSTANDING STOCK,
AND CUMULATIVE VOTING IS NOT AVAILABLE TO STOCKHOLDERS.

         Our current management currently owns (directly or indirectly)
approximately 27.5% of our outstanding common stock (considered on an undiluted
basis). Management's stock ownership would increase if they were to exercise
certain outstanding warrants issued to them directly or indirectly. Cumulative
voting in the election of directors is expressly denied in our Restated Articles
of Incorporation. Accordingly, the holder or holders of a majority of our
outstanding shares of common stock may elect all of our directors. Management's
large percentage ownership of our outstanding common stock helps enable them to
maintain their positions as such and thus control of our business and affairs.

         WE MAY EXPERIENCE RAPID GROWTH, AND IN SUCH CASE WE WILL NEED TO MANAGE
THIS GROWTH EFFECTIVELY.

         We believe that, given the right business opportunities, we may expand
our operations rapidly and significantly. If rapid growth were to occur, it
could place a significant strain on our management, operational and financial
resources. To manage any significant growth of our operations, we will be
required to undertake the following successfully:

         * Manage relationships with various strategic partners and other third
           parties;
         * Hire and retain skilled personnel necessary to support our business;
         * Train and manage a growing employee base;
         * Continually develop our financial and information management systems;
           and
         * Raise any required capital.

If we fail to make adequate allowances for the costs and risks associated with
this expansion or if our systems, procedures or controls are not adequate to
support our operations, our business could be harmed. Our inability to manage
growth effectively could materially and adversely affect our business, results
of operations and financial condition.

                          Risks Related to our Business

         OIL AND GAS PRICES ARE VOLATILE, HAVE BEEN LOW IN RECENT YEARS, AND
COULD BE LOW AGAIN IN THE FUTURE.

         Our revenues, profitability and future growth and the carrying value of
our properties will depend substantially on the prices we realize for our oil
and gas production. Our realized prices will also affect the amount of cash flow
available for capital expenditures and our ability to borrow and raise
additional capital. Oil and gas are commodities and, therefore, their prices are
subject to wide fluctuations in response to relatively minor changes in supply
and demand. Historically, the markets for oil and gas have been volatile, and
they are likely to continue to be volatile in the future. Starting from a level
below $4.00/MCF at the end of 2002, natural gas prices experienced a steady
climb to over $8.00/MCF by July 2005. Natural gas prices have recently increased
substantially, reaching levels in excess of $15.50/MCF near the middle of
December 2005. Since the middle of December 2005, natural gas prices have
declined to approximately $7.00/MCF as of the end of March 2006. Oil prices have
also increased over the last several years, rising from less than $30.00/BBL in
2003 to over $70.00/BBL in 2005 as a result of hurricanes striking the Gulf
Coast in the fall of 2005. Subsequently, oil prices have declined somewhat.

                                       A-9
<PAGE>

Generally, the increases in oil and natural gas prices since 2002 have been
characterized by occasional, but not sustained, price declines. Despite the
historically high nominal prices for natural gas and oil, there can be no
assurance that significantly lower prices will not be experienced again in the
future. Among the factors that can cause price volatility are:

         *  Worldwide or regional demand for energy, which is affected by
            economic conditions;
         *  The domestic and foreign supply, and inventories, of oil and gas;
         *  Weather conditions; * Domestic and foreign governmental regulations;
         *  Political conditions in gas or oil producing regions;
         *  The ability of members of the Organization of Petroleum Exporting
            Countries to agree upon and maintain oil prices and production
            levels; and
         *  The price and availability of alternative fuels.

Oil and gas price movements cannot be predicted with certainty. Lower oil and
gas prices may not only decrease our revenues on a per unit basis but also may
reduce the amount of oil and gas that we can produce economically. A substantial
or extended decline in oil and gas prices may materially and adversely affect
our future business, financial condition, results of operations, liquidity and
ability to finance capital expenditures. We recently initiated a hedging program
to potentially mitigate the impact of adverse changes in oil and gas prices.
However, there can be no assurance that this program will be successful in
accomplishing its purpose, and hedging has its own set of risks. See "RISK
FACTORS - OUR HEDGING DECISIONS MAY IMPACT OUR POTENTIAL GAINS FROM CHANGES IN
COMMODITY PRICES AND MAY RESULT IN LOSSES" below.

         THE SUCCESS OF OUR BUSINESS DEPENDS ON OUR ABILITY TO SELECT OIL AND
GAS PROJECTS THAT ULTIMATELY PROVE SUCCESSFUL ECONOMICALLY.

         We intend to drill exploratory test wells on properties with no
currently recognized proved oil and gas reserves. Drilling oil and gas wells
always involves the risk that no commercially productive oil or gas reservoirs
will be encountered. While all drilling (whether developmental or exploratory)
involves this risk, exploratory drilling involves greater risks of dry holes or
failure to find commercial quantities of oil and gas. Because of our exploratory
drilling activities, we are especially likely to experience exploration and
abandonment expenses from time to time in the future. The economic success of
any project will depend on a number of factors, including our ability to discern
and estimate the volumes of recoverable reserves relating to the project, rates
of future production, future commodity prices, operating costs, and possible
environmental liabilities. All of these factors affect whether or not a project
will ultimately generate cash flows sufficient to provide a suitable return on
investment. Our assessments and estimations of these factors (which are
inherently inexact and uncertain) may prove inaccurate. Moreover, there is no
specific criterion for selecting the oil and gas projects that we will decide to
pursue. Accordingly, we will have significant flexibility in selecting such
projects. There can be no assurance that we will be able to identify
economically successful oil and gas projects or that we will be able to pursue
these projects successfully even if identified. Our failure to select
economically successful oil and gas projects will materially and adversely
affect our business, results of operations and financial condition. Even if we
add reserves through our exploration activities, our reserves will decline as
they are produced. We will be constantly challenged to add new reserves through
further exploration or further development of our existing properties. There can
be no assurance that our exploration and development activities will be
successful in adding new reserves. If we fail to replace reserves, our level of
production and cash flows will be adversely impacted.

                                       A-10
<PAGE>

         THE SELECTION OF OIL AND GAS PROJECTS INVOLVES NUMEROUS RISKS UNRELATED
TO THE PRESENCE OR ABSENCE OF RECOVERABLE RESERVES RELATING TO THE PROJECT.

         Even though we intend to perform a review (that we believe is
consistent with industry practices) of each project we decide to pursue, reviews
of this nature are often limited in scope. Moreover, these reviews may not
reveal all existing or potential problems nor will they permit us to become
sufficiently familiar with the related properties to fully assess their
deficiencies and capabilities. In addition, inspections may not always be
performed on every platform or well, and structural or environmental problems
may not be observable even when an inspection is undertaken. Even when problems
are identified, the seller or lessor may be unwilling or unable to provide
effective contractual protection against all or part of the problems. We are
generally not entitled to contractual indemnification for environmental
liabilities, and we may be required to pursue many projects on an "as is" basis.
Accordingly, we may be required to make significant expenditures to cure
environmental contamination relating to acquired properties. If we are unable to
remedy or cure any title defect or potential environmental problem of a nature
such that drilling operations on the property would not be prudent, we could
suffer a loss of our entire investment in the property.

         WE ARE CURRENTLY FOCUSING OUR OPERATIONAL EFFORTS IN ONLY ONE
EOGRAPHICAL AREA, AND OUR CURRENT LACK OF GREATER DIVERSIFICATION ENTAILS
CONSIDERABLE RISKS.

         Currently, all of our oil and gas interests lie in the Barnett Shale
play located in the State of Texas, although we may in the future own or lease
properties and operate in areas other than the Barnett Shale. At present, our
success depends entirely upon our ability to locate and produce oil and gas on a
profitable basis on and from our interests in the Barnett Shale. There can be no
assurance that we will be able to do this, and that we will not encounter one or
more problems arising from the particular geological characteristics of the
Barnett Shale. Our current lack of diversification beyond the Barnett Shale may
make our results of operations more volatile than they would be if we were
seeking to develop interests in more than one area. For more information about
the Barnett Shale, see "PLAN OF OPERATION."

         OUR APPROACH TO TITLE ASSURANCE COULD MATERIALLY AND ADVERSELY AFFECT
OUR BUSINESS AND OPERATIONS.

         We intend to purchase additional working and revenue interests in oil
and gas leasehold interests. The existence of a material title deficiency can
render a lease worthless and can result in a large expense to our business. In
some instances, we may forego the expense of retaining lawyers to examine the
title to the mineral interest to be placed under lease or already placed under
lease. Rather, we will rely upon the judgment of oil and gas lease brokers or
landmen who perform the field work in examining records in the appropriate
government office before attempting to place under lease a specific mineral
interest. This is a customary practice in the oil and gas industry. Prior to the
drilling of an oil or gas well, however, it is the normal practice in the oil
and gas industry for the person or company acting as the operator of the well to
obtain a preliminary title review of the spacing unit within which the proposed
oil or gas well is to be drilled to ensure there are no obvious deficiencies in
title to the well. In some instances, we, or the person or company acting as
operator of the wells located on the properties that we intend to lease, may not
obtain counsel to examine title to such spacing unit until the well is about to
be drilled. As a result of such examinations, certain curative work may need to
be performed to correct deficiencies in the marketability of the title, and such
curative work will entail additional expense. The work might include obtaining
affidavits of heirship or causing an estate to be administered. Occasionally,

                                       A-11
<PAGE>

the examination made by the title lawyers reveals that the oil and gas lease or
leases are worthless, having been purchased in error from a person who is not
the owner of the mineral interest desired. In such instances, the amount paid
for such oil and gas lease or leases is generally lost. If we were to lose the
amount paid for any such oil and gas lease, such loss could materially and
adversely affect our business. Since we do not intend to retain title lawyers in
connection with our acquisitions, the risk of such losses in our operations is
increased. We note, however, that management decided to obtain drill site, third
party title assurance for the tract of land on which wells selected by
management were drilled.

         DEVELOPMENT ACTIVITIES ON EVEN WELL-SELECTED PROJECTS MAY BE
UNSUCCESSFUL FOR MANY REASONS, INCLUDING WEATHER, COST OVERRUNS, EQUIPMENT
SHORTAGES AND MECHANICAL DIFFICULTIES.

         The selection of attractive oil and gas projects does not ensure
success. The development of oil and gas projects involves a variety of operating
risks, including:

         *        Fires;
         *        Explosions;
         *        Blow-outs and surface cratering;
         *        Uncontrollable flows of natural gas, oil and formation water;
         *        Natural disasters, such as hurricanes and other adverse
                  weather conditions;
         *        Pipe, cement, subsea well or pipeline failures;
         *        Casing collapses;
         *        Mechanical failure of drilling equipment;
         *        Complete loss of the well bores;
         *        Ineffective hydraulic fracs;
         *        Embedded oil field drilling and service tools;
         *        Abnormally pressured formations; and
         *        Environmental hazards, such as natural gas leaks, oil spills,
                  pipeline ruptures and discharges of toxic gases.

If we experience any of these problems, it could affect well bores, platforms,
gathering systems and processing facilities, which could adversely affect our
ability to conduct operations and which could lead to significant cost overruns
and substantial losses.

         We could also incur significant cost overruns and substantial losses as
a result of:

         *        Injury or loss of life;
         *        Severe damage to and destruction of property, natural
                  resources and equipment;
         *        Pollution and other environmental damage;
         *        Clean-up responsibilities;
         *        Regulatory investigations and penalties;
         *        Suspension of our operations; and * Repairs to resume
                  operations.

These conditions may cause substantial damage to facilities, interrupt
production and reduce proved reserves. As a result, we could incur substantial
liabilities that could reduce or eliminate the funds available for development
or property acquisitions, or result in loss of equipment and properties.

                                       A-12
<PAGE>

         Presently, we maintain insurance in accordance with prevailing industry
practices against the types of risks, losses and liabilities that customarily
arise out of oil and gas exploration and production activities. Nevertheless,
our operators' insurance may prove inadequate. Moreover, we may in the future
cease insurance for some risks if we believe the cost of available insurance is
excessive relative to the risks presented. In addition, some risks may not be
fully insurable if insurable at all. Our insurance will probably never cover all
potential claims or may not adequately indemnify us for all liabilities to which
we will be exposed. Any liability or legal defense expenses not covered by
insurance or exceeding our insurance coverage could materially and adversely
affect our business, operating results and financial condition. Moreover, we do
not currently carry business interruption insurance.

         Finally, the successful drilling of an oil or gas well does not ensure
a profit on investment. A variety of factors, both geological and
market-related, can cause a well to become uneconomical or only marginally
economic.

         OUR RELIANCE ON A NUMBER OF THIRD PARTIES EXPOSES US TO A NUMBER OF
RISKS; PARTICULARLY WE CURRENTLY RELY VERY HEAVILY ON A SINGLE PIPELINE AND
PURCHASER OF OUR GAS PRODUCTION.

         Our operations will depend on a number of third parties. We will have
limited control over these third parties. We will probably not have long-term
agreements with many of them. We may rely upon various companies to assist us in
identifying desirable gas and oil prospects to acquire and provide us with
technical assistance and services. We also may rely upon the services of
geologists, geophysicists, chemists, engineers and other scientists to explore
and analyze our prospects to determine a method in which the prospects may be
developed in a cost-effective manner. In addition, we intend to rely upon the
owners and operators of oil rigs and drilling equipment, and upon providers of
oilfield services, to drill and develop our prospects to production. Moreover,
we must rely on third party gathering or pipeline facilities to transport and
purchase our production. Particularly, in fiscal 2005, a single pipeline
transported and single purchaser purchased nearly all of our gas production. We
expect to be constrained to rely heavily on this pipeline and purchaser for an
extended period of time into the future. Our inability to rely successfully on
this pipeline and purchaser to transport and purchase our gas production from
the related leases could materially and adversely affect our business, results
of operations and financial condition. Overall, our inability to maintain
satisfactory relationships with the requisite third parties on acceptable
commercial terms, or the failure of such third parties to maintain the quality
of services they provide at a satisfactory standard, could materially and
adversely affect our business, results of operations and financial condition.

         THE UNAVAILABILITY OR HIGH COST OF DRILLING RIGS, EQUIPMENT, SUPPLIES,
PERSONNEL AND OILFIELD SERVICES COULD MATERIALLY AND ADVERSELY AFFECT US.

         Either shortages or increases in the cost of drilling rigs, equipment,
supplies or personnel could delay or adversely affect our operations, which
could materially and adversely affect our business, financial condition and
results of operations. Drilling activity in the area of our activities is
extremely high. Increased drilling activity could decrease the availability of
rigs and oilfield services. As a further result of the increased drilling
activity, associated costs (including those related to drilling rigs, equipment,
supplies and personnel and the services and products of other vendors to the
industry) could increase as well. These costs may increase further, and
necessary equipment and services may not be available to us at economical
prices.

                                       A-13
<PAGE>

         WE MAY INCUR SUBSTANTIAL IMPAIRMENT WRITEDOWNS IN THE FUTURE.

         For properties on which we establish proved oil and gas reserves, we
will review such properties for impairment when circumstances suggest there is a
need for such a review. For each property determined to be impaired, we will
recognize an impairment loss equal to the difference between the carrying value
and the fair value of the property on our balance sheet. Fair value is estimated
to be the present value of expected future net cash flows computed by applying
estimated future oil and gas prices (as determined by management) to the
estimated future production of oil and gas reserves over the economic life of a
property. Future cash flows are based upon an independent engineer's estimate of
proved reserves. In addition, other factors such as probable and possible
reserves are taken into consideration when justified by economic conditions and
actual or planned drilling. If oil and gas prices decrease or if the recoverable
reserves on a property are revised downward, we may be required to record
impairment writedowns, which would result in a negative impact to our financial
position. We also may be required to record impairment writedowns with respect
to properties lacking economic access to markets, and we will be required to
record impairment writedowns with regard to leases that expire, which could also
in either case result in a negative impact to our financial position.

         OUR HEDGING DECISIONS MAY IMPACT OUR POTENTIAL GAINS FROM CHANGES IN
COMMODITY PRICES AND MAY RESULT IN LOSSES.

         To reduce our exposure to fluctuations in the prices of oil and gas, we
recently began a hedging program with respect to our expected production.
Hedging arrangements expose us to the risk of financial loss in some
circumstances, including the following:

         *        Production is less than expected;
         *        The other party to the hedging contract defaults on its
                  contract obligations;
         *        We could be required to post additional cash to cover margin
                  requirements, which could materially and adversely affect our
                  liquidity;
         *        We could be unable to meet additional margin requirements,
                  which could result in the closing of our positions thereby
                  leading to a financial loss as well as the possible loss of
                  the anticipated benefits of the related hedging transactions;
                  and
         *        There is a change in the expected differential between the
                  underlying price in the hedging agreement and actual prices
                  received.

         Furthermore, we granted a security interest in certain of our
properties to secure certain of our hedging arrangement. This security
arrangement subjects us to the risk of a forfeiture of the property securing the
hedging arrangement. Hedging arrangements may limit the benefit we would receive
from increases in the prices for oil and gas.

         WE ARE SUBJECT TO COMPLEX LAWS AND REGULATIONS, INCLUDING ENVIRONMENTAL
REGULATIONS, WHICH CAN MATERIALLY AND ADVERSELY AFFECT THE COST, MANNER OR
FEASIBILITY OF DOING BUSINESS.

         Development, production and sale of oil and gas are subject to
extensive laws and regulations, including environmental laws and regulations. We
may be required to make large expenditures to comply with environmental and
other government regulations. Matters subject to regulation include:

         *        Discharge permits for drilling operations;
         *        Bonds for ownership, development and production of oil and gas
                  properties;
         *        Reports concerning operations;
         *        Taxation; and
         *        The manner and amount of production from oil and gas
                  properties.

                                       A-14
<PAGE>

         Under these laws and regulations, we could be liable for personal
injuries, property damage, oil spills, discharge of hazardous materials,
remediation and clean-up costs and other environmental damages. Failure to
comply with these laws and regulations also may result in the suspension or
termination of our operations and subject us to administrative, civil and
criminal penalties. Moreover, these laws and regulations could change in ways
that substantially increase our costs. Accordingly, any of these liabilities,
penalties, suspensions, terminations or regulatory changes could materially and
adversely affect our financial condition and results of operations.

         OUR COMPETITORS MAY HAVE GREATER RESOURCES, WHICH COULD ENABLE THEM TO
PAY A HIGHER PRICE FOR PROPERTIES AND TO BETTER WITHSTAND PERIODS OF LOW MARKET
PRICES FOR OIL AND NATURAL GAS.

         The petroleum and natural gas industry is intensely competitive, and we
compete with other companies that have substantially larger financial resources,
operations, staffs and facilities. Many of these companies not only explore for
and produce crude oil and natural gas but also carry on refining operations and
market oil and other products on a regional, national or worldwide basis. Such
companies may be able to pay more for productive oil and natural gas properties
and exploratory prospects or define, evaluate, bid for and purchase a greater
number of properties and prospects than our financial or human resources permit.
In addition, such companies may have a greater ability to continue exploration
activities during periods of low hydrocarbon market prices. Moreover, we believe
that larger competitors have better access to equipment and services than we do
(especially in the current tight market), and such competitors are able to
obtain better prices than we can for such equipment and services. Our ability to
acquire additional properties and to discover reserves in the future will be
dependent upon our ability to evaluate and select suitable properties and to
consummate transactions in a highly competitive environment. For more
information regarding the competition to which we will be exposed, see
"COMPETITION."

                        Risks Related to our Common Stock

         OUR AUTHORIZED PREFERRED STOCK EXPOSES HOLDERS OF OUR COMMON STOCK TO
CERTAIN RISKS.

         Our Restated Articles of Incorporation, as amended, authorize the
issuance of up to 10,000,000 shares of preferred stock, par value $.01 per
share. The authorized but unissued preferred stock constitutes what is commonly
referred to as "blank check" preferred stock. This type of preferred stock may
be issued by the Board of Directors from time to time on any number of
occasions, without stockholder approval, as one or more separate series of
shares comprised of any number of the authorized but unissued shares of
preferred stock, designated by resolution of the Board of Directors stating the
name and number of shares of each series and setting forth separately for such
series the relative rights, privileges and preferences thereof, including, if
any, the: (i) rate of dividends payable thereon; (ii) price, terms and
conditions of redemption; (iii) voluntary and involuntary liquidation
preferences; (iv) provisions of a sinking fund for redemption or repurchase; (v)
terms of conversion to common stock, including conversion price, and (vi) voting
rights. Such preferred stock may provide our Board of Directors the ability to
hinder or discourage any attempt to gain control of us by a merger, tender offer
at a control premium price, proxy contest or otherwise. Consequently, the
preferred stock could entrench our management. The market price of our common
stock could be depressed to some extent by the existence of the preferred stock.
As of the date of this Annual Report, no shares of preferred stock had been
issued.

                                       A-15
<PAGE>

         WE HAVE CERTAIN OBLIGATIONS AND THE GENERAL ABILITY TO ISSUE ADDITIONAL
SHARES OF COMMON STOCK IN THE FUTURE, AND SUCH FUTURE ISSUANCES MAY DEPRESS THE
PRICE OF OUR COMMON STOCK.

         We have various obligations and the ability to issue additional shares
of common stock in the future. For example, we expect to issue up to 2.5 million
shares as additional consideration in connection with our acquisition of all of
the outstanding equity interests in EBS Oil and Gas Partners Production Company,
L.P. and its affiliates ("EBS"). This additional consideration will be issued
for reserves subsequently established with respect to certain EBS wells that
were in various stages of development as of January 30, 2006 but that did not
have production sustained for a sufficient period of time to permit an
independent engineer to estimate proved reserves. Our obligations to issue stock
also include outstanding warrants to purchase approximately 1,252,500 registered
shares of common stock as of January 30, 2006. These warrants permit the holders
to purchase shares of common stock at specified prices. These purchase prices
may be less than the then current market price of our common stock. Any shares
of common stock issued pursuant to these warrants would further dilute the
percentage ownership of existing stockholders. The terms on which we could
obtain additional capital during the life of these warrants may be adversely
affected because of such potential dilution. We are also obligated to issue up
to 945,000 shares to two key members of management upon the occurrence of
certain events. These obligations are described in "ITEM 10. EXECUTIVE
COMPENSATION - Compensation and Change in Control Agreements with Key
Personnel." Finally, we may issue additional shares in the future other than as
listed above. There are no preemptive rights in connection with our common
stock. Thus, the percentage ownership of existing stockholders may be diluted if
we issue additional shares in the future. For future issuances of shares and
grants of options, our Board of Directors will determine the timing and size of
the issuances and grants and the consideration or services required therefor.
Our Board of Directors intends to use its reasonable business judgment to
fulfill its fiduciary obligations to our then existing stockholders in
connection with any such issuance or grant. Nonetheless, future issuances of
additional shares could cause immediate and substantial dilution to the net
tangible book value of shares of common stock issued and outstanding immediately
before such transaction. Any future decrease in the net tangible book value of
such issued and outstanding shares could materially and adversely affect the
market value of the shares.

         SALES OF LARGE QUANTITIES OF OUR COMMON STOCK COULD REDUCE THE PRICE OF
OUR COMMON STOCK.

         Any sales of large quantities of shares of our common stock could
reduce the price of our common stock. We have recently brought current the
resale registration by stockholders of 13,632,085 shares of our common stock.
Moreover, a similar resale registration of an additional 6.9 million shares
could occur in the fairly near future. The holders of any of these shares may
offer to sell such shares at any price and at any time determined by them
without limitation. If holders sell large quantities of shares of our common
stock, our common stock price may decrease and the public market for our common
stock may otherwise be adversely affected because of the additional shares
available in the market.

         OUR COMMON STOCK HAS EXPERIENCED LIMITED TRADING.

         Since June 20, 2005, our common stock has been listed and traded on the
American Stock Exchange. Prior to that time, our common stock was traded in the
over-the-counter market on the OTC Electronic Bulletin Board. Occasionally, the
volume of trading in our common stock has been light, and the prices and volumes
at which our common stock has traded have fluctuated fairly widely on a
percentage basis. There can be no assurance as to the prices at which our common
stock will trade in the future. Until shares of our common stock become more

                                       A-16
<PAGE>

broadly held and orderly markets develop, and even thereafter, the price of our
common stock may fluctuate significantly. The price for our common stock will be
determined in the marketplace and may be influenced by many factors, including
the following:

         *        The depth and liquidity of the markets for our common stock;
         *        Investor perception of us and the industry in which we
                  participate;
         *        General economic and market conditions;
         *        Responses to quarter-to-quarter variations in operating
                  results;
         *        Failure to meet securities analysts' estimates;
         *        Changes in financial estimates by securities analysts;
         *        Conditions, trends or announcements in the oil and gas
                  industry;
         *        Announcements of significant acquisitions, strategic
                  alliances,  joint ventures or capital commitments by us or our
                  competitors;
         *        Additions or departures of key personnel;
         *        Sales of our common stock;
         *        Accounting pronouncements or changes in accounting rules that
                  affect our financial statements; and
         *        Other factors and events beyond our control.

         The market price of our common stock could experience significant
fluctuations unrelated to our operating performance. As a result, a stockholder
(due to personal circumstances) may be required to sell such stockholder's
shares of our common stock at a time when our stock price is depressed due to
fluctuations, possibly based on factors beyond our control.

                                 EBS ACQUISITION

         On November 30, 2005, the Company announced that it had entered into a
binding purchase and sale agreement (the "Acquisition Agreement") with Kelly K.
Buster, James I. Staley, Enexco, Inc., the Class B Limited Partners of EBS, and
EBS Oil & Gas Partners Production GP, LLC (separately a "Seller" and
collectively the "Sellers"), pursuant to which the Company agreed to purchase
from the Sellers, and the Sellers agreed to sell to the Company, all of the
outstanding equity interests (the "Equity Interests") in EBS Oil and Gas
Partners Production Company, L.P. and EBS Oil and Gas Partners Operating
Company, L.P. (collectively "EBS"). EBS was a privately held entity engaged in
the drilling and completion of wells on various oil and gas leases covering
lands located primarily in Cooke, Montague, and Wise Counties, Texas. The
acquisition of the Equity Interests (the "Transaction") was consummated on March
15, 2006, with the effective time (the "Effective Time") of the Transaction
being October 1, 2005.

         The acquired EBS assets consist (in part) of rights in approximately
9,837 gross acres. EBS has drilled and operates 30 wells (gross) located
primarily in the Barnett Shale. EBS also owns varying working interests in wells
operated by third parties. In addition, EBS owns an approximately one-sixth
interest in Tri-County Gathering, a pipeline system (operated by Cimmarron
Gathering, LLP) that is the primary transporter of gas sold by EBS in the
Barnett Shale area. This pipeline is comprised of approximately 14 miles of
gathering lines and three compression stations with approximately 2,500
horsepower of compression with pipeline capacity of approximately 20 million
cubic feet per day.

                                       A-17
<PAGE>

         The purchase price for the Equity Interests consisted of an initial
purchase price paid at closing (the "Initial Purchase Price") and additional
consideration to be paid after closing (the "Additional Consideration"). The
Initial Purchase Price was set at $9,804,839, subject to certain adjustments.
The adjustments included a reduction in the Initial Purchase Price for all debt
owed by EBS, including (a) indebtedness in the approximate amount of $5.85
million owed by EBS to the Company, and (b) indebtedness in the approximate
amount of $1.6 million owed by EBS to a third party (the "Third Party Loan")
(the Third Party Loan was paid off in its entirety in connection with the
closing of the Transaction). After making adjustments, the Company paid in cash
at the closing approximately $151,000 to the Class B partners of EBS and an EBS
payable in the amount of approximately $294,000, and the Company received a
credit in the approximate amount of $1.7 million against the future payment of
the Additional Consideration discussed below. Funding for the cash paid at the
closing and the retirement of the Third Party Loan was provided from the
Company's available cash and by GasRock Capital LLC ("GasRock") pursuant to an
Advancing Term Credit Agreement (the "Credit Agreement") discussed below.
Funding for the cash portion of the Additional Consideration will be provided by
GasRock pursuant to the Credit Agreement.

         The amount of Additional Consideration will be based on certain EBS
wells (the "CVR Wells") that were in various stages of development as of the
date of the Acquisition Agreement but that did not have production sustained for
a sufficient period of time to permit a third party engineering report to
establish proved reserves. The amount of Additional Consideration will depend
upon the amount of "Proved Reserves" (as such term is used in the definitions
promulgated by the Society of Petroleum Evaluation Engineers and the World
Petroleum Congress) that the CVR Wells are determined to have after the closing
of the Transaction. The determination of the amount of the Additional
Consideration will take place on several occasions after the closing of the
Transaction.

         Other than as described in the remainder of this paragraph, prior to
the consummation of the Transaction, there were no material relationships
between (a) (i) EBS and its officers, directors, affiliates, associates or
shareholders, or (ii) GasRock and its officers, managers, affiliates, associates
or members, on the one hand, and (b) the officers, directors, affiliates,
associates or stockholders of the Company, on the other hand. On April 18, 2005,
the Company entered into an agreement (the "EBS Loan Agreement") with EBS
whereby the Company made available to EBS, on a revolving basis, funds (in the
Company's discretion) of up to a maximum sum of $1,000,000 outstanding at any
given time to enable EBS to cover costs in connection with its acquisition of
oil and gas leases. In consideration of the Company's providing this financing,
the Company received (a) an interest in each lease with respect to which amounts
were advanced, the type and amount of the interest depending on the size of the
net revenue interest of the leasehold interest owners in the related lease, and
(b) an option to acquire an undivided interest (up to 25% without EBS's consent)
in each lease with respect to which amounts are advanced. Prior to the closing
of the Transaction, 3,985 gross acres had been acquired under the EBS Loan
Agreement, and EBS owed an outstanding balance to the Company under the EBS Loan
Agreement of $433,359. Moreover, prior to the closing of the Transaction, the
Company had paid to participate in the drilling of nine wells and received
interests in these nine wells pursuant to the EBS Loan Agreement. Moreover, in
connection with the execution of the Acquisition Agreement, the Company
purchased from a group of private investors their rights as lenders in certain
outstanding Partnership Debt (referred to hereinafter as the "Purchased
Partnership Debt) owed by EBS to such group. The outstanding balance of, and the
purchase price paid by the Company for, the Purchased Partnership Debt was $3.85
million. The Purchased Partnership Debt is secured by subordinate liens on and
security interests in substantially all of EBS's assets. The Purchased
Partnership Debt accrues interest at the rate of 12% per annum, and (as amended)
will become due and payable in approximately five years. During December 2005
and January 2006, the Company made several additional loans to EBS increasing
the outstanding indebtedness by an additional $2.0 million. The documentation
governing the Purchased Partnership Debt was amended to cover these additional
loaned amounts as if they were part of the original Purchased Partnership Debt.
Accordingly, the additional loaned amounts accrue interest, are secured, and
mature in the same manner as the original Purchased Partnership Debt.

                                       A-18
<PAGE>

                                PLAN OF OPERATION

         Currently, the Company's primary area of interest is the Barnett Shale
play, which is located in the north central part of the state of Texas.
Houston-based Mitchell Energy made the first economic completion in the Barnett
Shale in the early 1980's. The Barnett Shale is considered a world-class,
unconventional, blanket gas reservoir. At current gas prices, wells drilled in
this area are regarded as low-risk, high-reward opportunities due to their
expected long-term production profiles. Once focused largely in Denton and Wise
counties, expansion has occurred into several other counties. Productive
characteristics vary widely across the Barnett Shale play, reflecting the
geologic variability of the formation itself. These characteristics and their
variability present significant operational challenges to the establishment of
sufficient recovery efficiency. However, highly detailed reservoir
characterization studies and more refined drilling, completion, and fracturing
practices have improved well deliverability and economics.

         The Company's plan of operation involves drilling and testing wells on
the Company's currently leased acreage in the Barnett Shale (including that
acreage acquired in connection with the EBS acquisition discussed herein) to
prove reserves, complete promising test wells, extract the oil and gas that the
Company finds, and deliver them to market. The Company believes that this
acreage is sufficient for a sustained drilling program well into the future. The
Company is also in the process of acquiring rights in additional acreage.

         Based on current prices for materials and services, the Company
anticipates that each vertical well in its targeted area will cost between
$550,000 and $1.6 million to drill, test and complete and that each horizontal
well in its targeted area will cost between $750,000 and $3.0 million to drill,
test and complete, with the costs highly dependent upon the drilling depth and
horizontal length of a particular well. The Company's anticipated costs of
drilling operations are based on estimates obtained from third-party service
providers. However, the actual costs of such operations may be more or less than
the estimates contained herein, and the drilling of each well is subject to the
risk of cost overruns. See "RISK FACTORS - DEVELOPMENT ACTIVITIES ON EVEN
WELL-SELECTED PROJECTS MAY BE UNSUCCESSFUL FOR MANY REASONS, INCLUDING WEATHER,
COST OVERRUNS, EQUIPMENT SHORTAGES AND MECHANICAL DIFFICULTIES. If actual costs
of operations exceed the Company's estimates to any significant degree, the
Company may require additional funding to achieve its objectives.

         Before committing substantial resources, including obtaining necessary
permits and preparing for drilling on any particular leased property, the
Company plans to complete its due diligence on the leased properties. However,
the Company may not in some instances incur the additional expense of retaining
lawyers to examine the title to the Company's mineral interests. This practice
could expose the Company to certain risks, which are described in "RISK FACTORS
- OUR APPROACH TO TITLE ASSURANCE COULD MATERIALLY AND ADVERSELY AFFECT OUR
BUSINESS AND OPERATIONS." Management decided to obtain drill site, third party
title assurance for the tract of land on which wells selected by management were
drilled.

         The Company will select future drill sites based on a variety of
factors, including information gathered from historical records, drill logs and
third party contract drillers, proximity to existing pipelines, ease of access
for drilling equipment, seismic data, the presence of oil and natural gas
production in the immediate vicinity, and consultations with the Company's
geologist, geophysicist, operators, drillers and frac companies. As a portion of
this research information has already been obtained, the Company believes that

                                       A-19
<PAGE>

the future additional cost of identifying drill sites will be low relative to
other costs. With the exception of the evaluation of the geological formations
that the Company encounters during the drilling process, the cost of which has
been factored into the Company's estimated drilling costs, the Company does not
anticipate requiring significant product research except possibly seismic data
and results of third party drilling.

         Historically, once the Company had identified a proposed drill site, it
engaged the services of a third party operator licensed to operate oil and gas
wells in the State of Texas. With the acquisition of all of the outstanding
equity interests in EBS Oil and Gas Partners Production Company, L.P. and its
affiliates, the Company has attained licensed operator status, and no longer
expects to use the services of third party operators. As the operator of a well,
the Company will be responsible for:

            *     Permitting the well and obtaining permission from state
                  authorities relative to spacing requirements and any other
                  state and federal environmental clearances required at the
                  commencement of the permitting process;
         *        Formulating and delivering to all working interest owners an
                  operating agreement establishing each participant's rights and
                  obligations in that particular well; * Hiring the driller,
                  frac company, construction contractor and other third parties
                  to provide services for all aspects of the drilling operation,
                  except for geological services, supervising their efforts, and
                  actually drilling the well to the target zone;
         *        If the well is successful, completing the well and connecting
                  it to the most appropriate transmission facility for the
                  hydrocarbons produced;
         *        Serving as the caretaker of the well once production has
                  commenced, and as such, paying bills related to the well,
                  billing working interest owners for their proportionate
                  expenses in drilling and completing the well, and selling the
                  production from the well;
         *        Unless each interest owner sells its production separately,
                  collecting purchase payments from the purchaser of the
                  production, and, once a division order has been established
                  and confirmed by the interest owners, issuing checks monthly
                  to each interest owner in accordance with its appropriate
                  interest; and
         *        Maintaining the well and the wellhead site during the entire
                  term of production or until such time as a replacement
                  operator has been hired.

         Each well will be drilled and tested individually. If commercially
producible amounts of oil or gas are present, the well will be completed and
facilities installed to connect to gathering or pipeline facilities. Completed
wells that are producing and connected to distribution pipelines will begin
generating revenues as soon as they begin flowing although actual funds for the
sale of production may be delayed and not be received until 30 days after the
end of the month of sale or even longer. For wells with successful productions
tests, the Company may need to install necessary infrastructure to permit
delivery of the Company's gas from the wellhead to a major pipeline. The Company
has identified the locations of all major gathering and other facilities
currently installed in the general vicinity of the Company's target area and has
initiated contacts with the owners of these facilities to ascertain their
specific requirements with respect to transporting the Company's gas to
pipelines for transmission, including expected production volumes, gas quality,
and connection costs. Management believes that these pipelines usually purchase
all available gas that is in the vicinity of their systems. However, some of the
owners of these pipelines produce their own gas, which they also transport along
with other third-party gas such as that the Company intends to produce. Most of
the pipelines in the area of the Company's current oil and gas interests are not
required by law to transport any gas that the Company may produce. As a result,
if pipelines in the area reach capacity, any productive natural gas well
developed by the Company could be "shut-in" because of a lack of available
natural gas pipeline capacity.

                                       A*20
<PAGE>

         The cost of installing appropriate infrastructure to deliver the
Company's gas to a pipeline or gatherer will vary depending upon the distance
the gas must travel from the wellhead to the pipeline tap, tap fees, and whether
the gas first must be treated to meet the purchasing company's quality
standards. To minimize the costs of transporting gas to existing pipelines, the
Company intends to drill as close to existing pipelines as practicable. However,
ultimate connection costs cannot be accurately predicted at this time.

                                   PROPERTIES

         As of December 31, 2005, the Company had acquired a total leased
acreage position of 67,981 gross acres and 63,521 net acres in various Texas
counties in the Barnett Shale, including Denton, Cooke, Montague, Hill, Ellis,
Hamilton, Comanche and Mills Counties. As of December 31, 2005, all of this
acreage (other than 673 gross acres and 422 net acres) is "undeveloped acreage,"
which the U.S. Securities and Exchange Commission (the "Commission") defines as
"lease acreage on which wells have not been drilled or completed to a point that
would permit the production of commercial quantities of oil and gas regardless
of whether such acreage contains proved reserves." Of the Company's acreage, 673
gross acres and 422 net acres are regarded as "developed" acreage. The Company
completed four producing wells during fiscal 2005; the Company completed one
well during fiscal 2004, the first year of the Company's oil and gas exploration
and production activities. The Company has yet to drill a well determined to be
dry. Moreover, during fiscal 2005, the Company finished the drilling of an
additional seven well, and these wells are currently awaiting completion. For
additional information regarding these wells, see the table captioned "STATUS OF
SIGNIFICANT WELLS AS OF MARCH 24, 2006" below. A report prepared by LaRoche
Petroleum Consultants, Ltd. ("LaRoche") indicated that the Company's wells
(which does not include any assets acquired in connection with the EBS
acquisition) had as of December 31, 2005 net reserves of 96,406 barrels of oil
and 1,463,699 MCF of natural gas, and total future net revenue of $12,786,199,
which had a then present worth at 10% of $6,403,861. The oil price used in
computing the preceding revenue figures was based on a December 31, 2005, West
Texas Intermediate posted price of $57.75 per barrel, adjusted for gravity,
crude quality, transportation fees, and a regional price differential. The gas
price used in computing the preceding revenue figures was based on a December
31, 2005, Henry Hub physical price of $10.08 per MMBTU, adjusted for energy
content, transportation fees, and a regional price differential. Lease and well
operating costs were held constant in accordance with Commission guidelines. In
the fall of 2004, the Company entered into a standard gas sales agreement with
Targa Resources, Inc. pursuant to which Targa Resources has agreed to purchase
from the Company all gas production that is realized from the approximately
352-acre tract upon which the Company's first two wells were drilled and future
Company wells are expected to be drilled. The Company has entered into an
agreement with Plains Marketing, LP to purchase all oil production from these
wells.

         Moreover, the Company has completed its processing of a 4.3 square mile
three-dimensional seismic survey that it acquired in northern Hill County over
an area that includes a property leased by the Company. Based on this survey,
the Company selected a site for the first well to be drilled on this property.
As of January 30, 2006, the Company has permitted this well site and constructed
the drill pad. Utilizing the foregoing three-dimensional seismic survey, the
Company has also identified additional sites in northern Hill County to be
drilled in due course. The Company cannot assure anyone that it will find any
commercially producible amounts of oil or gas as a result of this drilling
program.

                                       A-21
<PAGE>

         In February 2006, the Company entered into an agreement to lease a rig
capable of drilling horizontal wells in the Barnett Shale at a contract rate of
$17,400 per day. The agreement includes an option to extend the term of the
agreement for an additional six months under the same terms and conditions.

         During fiscal 2005, the Company entered into an agreement (the "EBS
Agreement") with EBS Oil and Gas Partners Production Company, L.P. ("EBS"), then
a privately held entity that was subsequently acquired by the Company on March
15, 2006. Under the terms of the EBS Agreement, the Company made available to
EBS, on a revolving basis, funds of up to a maximum sum of $1,000,000
outstanding at any given time. The funds were advanced to cover the costs
incurred by EBS in connection with its acquisition of oil and gas leases. In
consideration of the Company's providing this financing, the Company received
varying interests or options to acquire interests in each lease with respect to
which amounts are advanced. As of the end of fiscal 2005, 3,985 gross acres had
been acquired under the EBS Agreement, and the Company had received interests in
eight wells pursuant to the EBS Agreement. In addition, separate and apart from
the EBS Agreement, the Company has acquired from EBS an interest in another
well, the Smith No. 1. For additional information regarding these and other
Company wells, see the table captioned "STATUS OF SIGNIFICANT WELLS AS OF MARCH
24, 2006" below.

         Effective July 1, 2004, the Company acquired from 3-R Production, Inc.
oil and gas leases and interests in three low production wells, the Massey #1,
the Dean #1 and the Cynthia Dale #1. The purchase price for these assets was
$69,375. A total of 555 gross acres were held by these producing wells. In
December 2005, the Company sold these 555 productive acres for aggregate sales
proceeds of $300,000, together with 467 undeveloped acres, which were sold for
aggregate additional sales proceeds of $173,100. Fees paid in connection with
this sale totaled $25,550, leaving the Company with $447,550 in aggregate net
sales proceeds from this sale.




                                      A-22
<PAGE>



         The following table gives certain information regarding the status of
wells operated by the Company and in which the Company owned a significant
interest:

                STATUS OF SIGNIFICANT WELLS AS OF MARCH 24, 2006

   Well                    Working Interest(1)                Status

1. Pruitt #1                    75%                         Producing

2. Pruitt #2-H                 100%                         Producing

3. Pruitt #3                   100%                         Producing

4. Kirby #1                     56%                         Producing

5. Mitchell #1                  59%                         Producing

6. Elam #1                      73%                         Waiting on
                                                            frac and pipeline

7. Christian #1                 56%                         Waiting on frac
                                                            and pipeline

8. Smith #1                     47%                         Waiting
                                                            on frac and pipeline

9. Summers #1                   52%                         Flowing back

10.Nunneley #1                  52%                         Waiting on frac

11.Whittington #1               49%                         Waiting on frac and
                                                            pipeline

12. Hawk Littell #1             42%                         Waiting on frac
                                                            and pipeline

13. Williams Estate #1          56%                         Waiting on frac
                                                            and pipeline

(1)      Includes working interests acquired in connection with the consummation
of the EBS transaction on March 15, 2006.

         Subsequent to the end of fiscal 2005, the Company completed its
acquisition of EBS, which substantially increased the Company's property base.
For more information regarding these properties, see "EBS ACQUISITION" above.

Future Activities

         If the Company is successful in its drilling activities, the Company
expects to continue with the subsequent development of its current properties
and additional properties it may acquire. The continuation of the Company's plan
of operation depends on the successful drilling and operation of additional
wells that produce commercial quantities of oil and gas and generate significant
positive cash flow. The Company intends to lease additional available land to
the extent that it believes such land will further the Company's oil and gas
oriented value creation activities. Such leases could be in the Barnett Shale,
other regions in Texas, or in areas outside of the state of Texas.




                                       A-23
<PAGE>



                             MARKETS AND MARKETING

         The petroleum industry has generally been characterized by rising oil
and natural gas commodity prices during 2005 and recent years. Also, the
industry has experienced increasing costs, particularly the cost of steel and
higher drilling and well servicing rig rates. World oil prices have increased in
response to political unrest and supply disruptions in Iraq, Venezuela, Nigeria
and Iran, while North American gas prices have improved as supply and demand
fundamentals have strengthened. Significant factors that will impact commodity
prices in the near term include the final resolution of issues currently
impacting Iraq and the Middle East in general, the extent to which members of
the Organization of Petroleum Exporting Countries ("OPEC") and other oil
exporting nations are able to continue to manage oil supply through export
quotas and overall North American gas supply and demand fundamentals. Worldwide
oil and North American gas prices currently remain favorable. However, the
outlook for future commodity prices is uncertain.

         The Company does not expect to refine any of its production, although
the Company may have to process some of its production to transport it or to
meet the purchasing company's quality standards. Instead, the Company expects
that all or nearly all of its production will be sold to a relatively small
number of purchasers. Production from the Company's properties will be marketed
consistent with industry practices. The availability of a ready market for the
Company's production will depend upon a number of factors beyond the Company's
control, including the availability of other domestic production, price, crude
oil imports, natural gas imports, the proximity and capacity of oil and gas
pipelines, and general fluctuations in supply and demand. Although the effect of
these factors cannot be accurately predicted or anticipated, the Company does
not anticipate any unusual difficulty in contracting to sell its production of
oil and gas to purchasers and end-users at prevailing market prices and under
arrangements that are usual and customary in the industry. However, there can be
no assurance that market, economic and regulatory factors will not in the future
materially and adversely affect the Company's ability to sell its production.
The Company will strive to develop markets with end-users, local distribution
companies, and natural gas brokers for gas produced from successful exploratory
and development wells. The Company expects that most of the natural gas that the
Company is able to find (if any) will be transported through gas gathering
systems and gas pipelines that are not owned by the Company. The Company's
current leased land is in fairly close proximity to gas pipelines suitable for
carrying the Company's production. Transportation space on gas gathering systems
and pipelines is occasionally limited and at times unavailable due to repairs or
improvements being made to the facilities or due to use by other gas shippers
with priority transportation agreements or who own or control the relevant
pipeline. If transportation space is restricted or is unavailable, the Company's
cash flow from the affected properties could be adversely affected. The Company
expects that it will generally sell its crude oil and natural gas production
pursuant to long-term sales contracts. The Company has currently entered into
only a limited number of long-term sales contract. However, the Company does not
believe that it will have any difficulty in entering into additional long-term
sales contracts for its production, although there can be no assurance in this
regard. Moreover, in certain cases, a property with good potential for
production may prove to lack adequate access to an existing pipeline or may lack
the potential for connection to a new pipeline, such that the Company is not
able to exploit the economic potential of the property. In such cases, the
Company may be required to record impairment writedowns with respect to such
property, which could result in a negative impact to our financial position. See
"RISK FACTORS - WE MAY INCUR SUBSTANTIAL IMPAIRMENT WRITEDOWNS IN THE FUTURE."

                                       A-24
<PAGE>

         Sales prices for oil and gas production are negotiated based on factors
normally considered in the industry, such as the spot price for gas or the
posted price for oil, price regulations, regional price variations, distance
from the well to the pipeline, well pressure, estimated reserves, commodity
quality and prevailing supply conditions. Historically, prices of crude oil and
natural gas have experienced high volatility. This high volatility is a result
of ever changing perceptions throughout the industry centered on supply and
demand. Although the Company cannot predict the occurrence of events that may
affect oil and gas prices or the degree to which oil and gas prices will be
affected, the prices for any oil or gas that the Company produces should be
equivalent to prevailing market prices in the geographic region, and the Company
will strive to obtain the best price in the area of its production. The
Company's revenues, profitability and future growth will depend substantially on
prevailing prices for crude oil and natural gas. Decreases in the prices of oil
and gas would likely adversely affect the carrying value of any proved reserves
that the Company is successful in establishing and the Company's prospects,
revenues, profitability and cash flow.

                                   COMPETITION

         The Company operates in the highly competitive areas of oil and gas
exploration, development and production. The Company believes that the level of
competition in these areas will continue into the future and may even intensify.
In the areas of oil and gas exploration, development and production, competitive
advantage is gained through superior capital investment decisions, technological
innovation and costs management. The Company's competitors include major oil and
gas companies, a large number of independent oil and gas companies, and numerous
individuals. Competition focuses primarily on the acquisition of properties that
appear attractive for the exploration for oil and gas. The principal competitive
factors in the acquisition of oil and gas properties include the staff and data
necessary to identify, investigate and purchase such properties and the
financial resources necessary to acquire and develop them. The Company also will
compete for the equipment and labor required to operate and to develop its
properties. Most of the Company's competitors have substantially larger
operating staffs and greater financial and other resources. In addition, larger
competitors may be able to absorb the burden of any changes in federal, state
and local laws and regulations more easily than the Company can, which would
adversely affect the Company's competitive position. These competitors may be
able to pay more for natural gas and oil properties and may be able to define,
evaluate, bid for and acquire a greater number of properties than the Company
can. In addition, most of the Company's competitors have been operating for a
much longer time than the Company has and have demonstrated the ability to
operate through a number of industry cycles. The Company's success in acquiring
additional properties and discovering reserves in the future will depend upon
its ability to evaluate and select suitable properties and to consummate
transactions in this highly competitive environment. The effect of the intense
competition that the Company will face cannot now be determined.

                                   REGULATION

 Oil and Gas Regulation

         The availability of a ready market for oil and gas production depends
upon numerous factors beyond the Company's control. These factors include state
and federal regulation of oil and gas production and transportation, as well as
regulations governing environmental quality and pollution control, state limits
on allowable rates of production by a well or proration unit, the amount of oil
and gas available for sale, the availability of adequate pipeline and other
transportation and processing facilities and the marketing of competitive fuels.
For example, a productive gas well may be "shut-in" because of an over-supply of
gas or lack of an available gas pipeline in the areas in which the Company may
conduct operations. State and federal regulations are generally intended to
prevent waste of oil and gas, protect rights to produce oil and gas between
owners in a common reservoir, and control contamination of the environment.
Pipelines and gas plants are also subject to the jurisdiction of various
federal, state and local agencies which may affect the rates at which they are
able to process or transport gas from the Company's properties.

                                       A-25
<PAGE>

         The Company's sales of natural gas will be affected by the
availability, terms and costs of transportation. The rates, terms and conditions
applicable to the interstate transportation of gas by pipelines are regulated by
the Federal Energy Regulatory Commission ("FERC") under the Natural Gas Acts
("NGA"), as well as under Section 311 of the Natural Gas Policy Act ("NGPA").
Since 1985, the FERC has implemented regulations intended to increase
competition within the gas industry by making gas transportation more accessible
to gas buyers and sellers on an open-access, non-discriminatory basis.

         The Company's sales of oil are also affected by the availability, terms
and costs of transportation. The rates, terms, and conditions applicable to the
interstate transportation of oil by pipelines are regulated by the FERC under
the Interstate Commerce Act. FERC has implemented a simplified and generally
applicable ratemaking methodology for interstate oil pipelines to fulfill the
requirements of Title VIII of the Energy Policy Act of 1992 comprised of an
indexing system to establish ceilings on interstate oil pipeline rates. The FERC
has announced several important transportation-related policy statements and
rule changes, including a statement of policy and final rule issued February 25,
2000 concerning alternatives to its traditional cost-of-service rate-making
methodology to establish the rates interstate pipelines may charge for their
services. The final rule revises FERC's pricing policy and current regulatory
framework to improve the efficiency of the market and further enhance
competition in natural gas markets.

         In the event the Company conducts operations on federal, state or
Indian oil and gas leases, such operations must comply with numerous regulatory
restrictions, including various nondiscrimination statutes, royalty and related
valuation requirements, and certain of such operations must be conducted
pursuant to certain on-site security regulations and other appropriate permits
issued by the Bureau of Land Management ("BLM") or Minerals Management Service
("MMS") or other appropriate federal or state agencies.

         The Mineral Leasing Act of 1920 ("Mineral Act") prohibits direct or
indirect ownership of any interest in federal onshore oil and gas leases by a
foreign citizen of a country that denies "similar or like privileges" to
citizens of the United States. Such restrictions on citizens of a
"non-reciprocal" country include ownership or holding or controlling stock in a
corporation that holds a federal onshore oil and gas lease. If this restriction
is violated, the corporation's lease can be canceled in a proceeding instituted
by the United States Attorney General. Although the regulations of the BLM
(which administers the Mineral Act) provide for agency designations of
non-reciprocal countries, there are presently no such designations in effect.
Certain holders of equity interests in the Company may be citizens of foreign
countries, which at some time in the future might be determined to be
non-reciprocal under the Mineral Act.

Environmental Regulation

         - General. The Company's activities will be subject to existing
federal, state and local laws and regulations governing environmental quality
and pollution control. The Company anticipates that, absent the occurrence of an
extraordinary event, compliance with existing federal, state and local laws,
rules and regulations governing the release of materials in the environment or
otherwise relating to the protection of the environment will not have a material
effect upon the Company's operations, capital expenditures, earnings or
competitive position. The Company's activities with respect to exploration,
drilling and production from wells, natural gas facilities, including the

                                       A-26
<PAGE>

operation and construction of pipelines, plants and other facilities for
transporting, processing, treating or storing natural gas and other products,
will be subject to stringent environmental regulation by state and federal
authorities including the Environmental Protection Agency ("EPA"). Such
regulation can increase the cost of such activities. In most instances, the
regulatory requirements relate to water and air pollution control measures.

         - Waste Disposal. The Company currently leases properties that it will
try to use for the production of oil and gas. Although the Company intends to
utilize operating and disposal practices that are standard in the industry,
hydrocarbons or other wastes may be released on or under the properties that the
Company currently or now after owns or leases. State and federal laws applicable
to oil and gas wastes and properties have become stricter. In the future, the
Company could be required to remediate property, including ground water,
containing or impacted by releases of hydrocarbons or other wastes or to perform
remedial plugging operations to prevent future or mitigate existing
contamination. The Company may generate wastes, including hazardous wastes that
are subject to the federal Resource Conservation and Recovery Act ("RCRA") and
comparable state statutes. The EPA has limited the disposal options for certain
wastes that are designated as hazardous under RCRA ("Hazardous Wastes").
Furthermore, it is possible that certain wastes generated by the Company's oil
and gas operations that are currently exempt from treatment as Hazardous Wastes
may in the future be designated as Hazardous Wastes, and therefore be subject to
more rigorous and costly operating and disposal requirements.

         - Superfund. The federal Comprehensive Environmental Response,
Compensation and Liability Act ("CERCLA"), also known as the "Superfund" law,
imposes joint and several liability for costs of investigation and remediation
and for natural resource damages, without regard to fault or the legality of the
original conduct, on certain classes of persons with respect to the release into
the environment of substances designated under CERCLA as hazardous substances
("Hazardous Substances"). These classes of persons or potentially responsible
parties ("PRP's") include the current and certain past owners and operators of a
facility where there is or has been a release or threat of release of a
Hazardous Substance and persons who disposed of or arranged for the disposal of
the Hazardous Substances found at such a facility. CERCLA also authorizes the
EPA and, in some cases, third parties to take actions in response to threats to
the public health or the environment and to seek to recover from the PRP's the
costs of such action. Although CERCLA generally exempts petroleum from the
definition of Hazardous Substances in the course of the Company's operations,
the Company may in the future generate wastes that fall within CERCLA's
definition of Hazardous Substances. The Company may also in the future become an
owner of facilities on which Hazardous Substances have been released by previous
owners or operators. The Company may in the future be responsible under CERCLA
for all or part of the costs to clean up facilities at which such substances
have been released and for natural resource damages. The Company has not been
named a PRP under CERCLA nor does the Company know of any prior owners or
operators of the Company's current properties that are named as PRP's related to
their ownership or operation of such property.

         - Air Emissions. The Company's operations will be subject to local,
state and federal regulations for the control of emissions of air pollution.
Major sources of air pollutants are subject to more stringent, federally imposed
permitting requirements, including additional permits. Administrative
enforcement actions for failure to comply strictly with air pollution
regulations or permits are generally resolved by payment of monetary fines and
correction of any identified deficiencies. Alternatively, regulatory agencies
could require the Company to forego construction, modification or operation of
certain air emission sources, although the Company believes that in the latter
cases the Company would have enough permitted or permittable capacity to
continue the Company's operations without a material adverse effect on any
particular producing field.

                                       A-27
<PAGE>

         - Clean Water Act. The Clean Water Act ("CWA") imposes restrictions and
strict controls regarding the discharge of wastes, including produced waters and
other oil and natural gas wastes, into waters of the United States, a term
broadly defined. These controls have become more stringent over the years, and
it is probable that additional restrictions will be imposed in the future.
Permits must be obtained to discharge pollutants into federal waters. The CWA
provides for civil, criminal and administrative penalties for unauthorized
discharges of oil, hazardous substances and other pollutants. It imposes
substantial potential liability for the costs of removal or remediation
associated with discharges of oil or hazardous substances. State laws governing
discharges to water also provide varying civil, criminal and administrative
penalties and impose liabilities in the case of a discharge of petroleum or it
derivatives, or other hazardous substances, into state waters. In addition, the
EPA has promulgated regulations that may require the Company to obtain permits
to discharge storm water runoff, including discharges associated with
construction activities. In the event of an unauthorized discharge of wastes,
the Company may be liable for penalties and costs.

         Management believes that the Company is in substantial compliance with
current applicable environmental laws and regulations and that continued
compliance with existing requirements will not materially and adversely impact
the Company.

                                    EMPLOYEES

         As of March 24, 2006, the Company had 13 employees, nine of whom became
employees of the Company upon the completion of the EBS acquisition. The Company
does not now foresee problems in hiring additional qualified employees to meet
its labor needs.

                                   FACILITIES

         The Company's principal executive offices are located in Houston, Texas
where the Company leases approximately 2,916 square feet under a lease that
terminates in March 2008. The Company's operational office is located in Dallas,
Texas where the Company leases approximately 4,993 square feet under a lease
that terminates in February 28, 2008. Management further believes that
additional space and any required alternative office space can be readily
obtained if needed.

ITEM 3.  LEGAL PROCEEDINGS

         The Company is now currently involved in two pending legal proceedings
that the Company assumed in connection with the EBS acquisition. The Company
believes that each of these proceedings are routine and arose in the normal
course of business. Moreover, the Company has indemnification agreements from
the principals of EBS covering any loss that the Company may suffer in the
future as a result of these proceedings. In the future, the Company may become
involved in various legal proceedings from time to time, either as a plaintiff
or as a defendant, and either in or outside the normal course of business. The
Company is not now in a position to determine when (if ever) such a legal
proceeding may arise. If the Company ever becomes involved in a legal
proceeding, the Company's financial condition, operations, or cash flows could
be materially and adversely affected, depending on the facts and circumstances
relating to such proceeding.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

         None.

                                       A-28
<PAGE>


                                    PART II.

ITEM 5.  MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.

         The Company's common is listed and trades on the American Stock
Exchange under the symbol "WHT." After a period in which the Company's common
stock was not publicly traded, the Company's common stock began trading again in
very limited quantities in the "Electronic Pink Sheets" of the National
Quotation Bureau during or about March 2004. Management believes that, prior to
these sales, no public sale of the Company's common stock had occurred since
June 2002. In any event, after a reasonable effort, management was unable to
find any data regarding the bid, ask and sales prices of the Company's common
stock since January 1, 2000 (if any such data exists) up until March 2004. The
following table sets forth the high and low reported closing prices for the
Company's Common Stock for completed quarters since March 2004. Such quotations
represent interdealer prices, without retail markup, markdown or commission, and
do not necessarily represent the price of actual transactions for the fiscal
quarters indicated.

                                             HIGH                      LOW
                                             ----                      ---

                  2005

                  Fourth Quarter            $4.30                      $3.30
                  Third Quarter              4.10                       3.35
                  Second Quarter             4.65                       3.53
                  First Quarter              5.50                       3.05

                  2004

                  Fourth Quarter            $4.75                      $2.74
                  Third Quarter              3.20                       2.70
                  Second Quarter             3.40                       1.25

         As of March 24, 2006, the Company had 214 holders of record. Management
believes that the Company has approximately 1,000 beneficial holders of its
stock, although the exact number of these holders cannot be determined.

         The Company has never paid cash dividends, and has no intentions of
paying cash dividends in the foreseeable future.

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS.

         The following discussion and analysis of our financial condition and
results of operations should be read in conjunction with our consolidated
financial statements and related notes included elsewhere in this report. In
addition to historical information, the discussion in this report contains
forward-looking statements that involve risks and uncertainties. Actual results
could differ materially from those anticipated by these forward-looking
statements due to factors including, but not limited to, those factors set forth
under "Risk Factors" and elsewhere in this report.




                                       A-29
<PAGE>



                  CRITICAL ACCOUNTING POLICIES AND ESTIMATES

         Critical accounting policies are defined as those significant
accounting policies that are most critical to an understanding of a company's
financial condition and results of operations. We consider an accounting
estimate or judgment to be critical if (1) it requires assumptions to be made
that were uncertain at the time the estimate was made, and (2) changes in the
estimate or different estimates that could have been selected could have a
material impact on our results of operations or financial condition.

         We believe that the following significant accounting policies will be
most critical to an evaluation of our future financial condition and results of
operations.

Proved Oil and Natural Gas Reserves

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

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

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

         Volumes of reserves are estimates that, by their nature, are subject to
revision. The estimates are made using all available geological and reservoir
data as well as production performance data. There are numerous uncertainties in
estimating crude oil and natural gas reserve quantities, projecting future
production rates and projecting the timing of future development expenditures.
Oil and gas reserve engineering must be recognized as a subjective process of
estimating underground accumulations of oil and gas that cannot be measured in
an exact way. Estimates of independent engineers that we use may differ from
those of other engineers. The accuracy of any reserve estimate is a function of
the quantity of available data and of engineering and geological interpretation
and judgment. Accordingly, future estimates are subject to change as additional
information becomes available.

Successful Efforts Accounting

         We utilize the successful efforts method to account for our crude oil
and natural gas operations. Under this method of accounting, all costs
associated with oil and gas lease acquisitions, successful exploratory wells and
all development wells are capitalized and amortized on a unit-of-production
basis over the remaining life of proved developed reserves and total proved
reserves on a field basis. Unproved leasehold costs are capitalized pending the
results of exploration efforts. Exploration costs, including geological and
geophysical expenses, exploratory dry holes and delay rentals, are charged to
expense when incurred.

                                       A-30
<PAGE>

Impairment of Properties

         We review our proved properties for potential impairment at the lease
level when management determines that events or circumstances indicate that the
recorded carrying value of the properties may not be recoverable. Such events
include a projection of future oil and natural gas reserves that will be
produced from a lease, the timing of this future production, future costs to
produce the oil and natural gas, and future inflation levels. If the carrying
amount of an asset exceeds the sum of the undiscounted estimated future net cash
flows, we recognize impairment expense equal to the difference between the
carrying value and the fair market value of the asset, which is estimated to be
the expected present value of future net cash flows from proved reserves,
without the application of any estimate of risk. We cannot predict the amount of
impairment charges that may be recorded in the future. Unproved leasehold costs
are reviewed periodically and a loss is recognized to the extent, if any, that
the cost of the property has been impaired.

Asset Retirement Obligations

         We are required to estimate the future costs of the retirement
obligations of our producing oil and gas properties. Those abandonment costs, in
some cases, will not be incurred until a substantial number of years in the
future. Such cost estimates could be subject to significant revisions in
subsequent years due to changes in regulatory requirements, technological
advances and other factors that may be difficult to predict.

Stock-Based Compensation

         Compensation expense has been recorded for common stock grants based on
the fair value of the common stock on the measurement date. SFAS No 123R "Shared
Based Payments" ("SFAS No. 123R") establishes standards for accounting for
transactions in which an entity exchanges its equity instruments for goods and
services. This Statement focuses primarily on accounting for transactions in
which an entity obtains employee services in share-based payment transactions.
SFAS No 123R requires that the fair value of such equity instruments be
recognized as expense in the historical financial statements as services are
performed. SFAS No. 123R shall be effective for us as of the beginning of 2006
and will have no impact on our financial statements as the only stock-based
compensation that we have previously issued was common stock grants that were
recorded at fair value.

Income Taxes

         We are subject to income and other related taxes in areas in which we
operate. When recording income tax expense, certain estimates are required by
management due to timing and the impact of future events on when we recognize
income tax expenses and benefits. We will periodically evaluate our tax
operating loss and other carryforwards to determine whether we should recognize
in our financial statements a gross deferred tax asset, as well as a related
valuation allowance.




                                       A-31
<PAGE>



                              RESULTS OF OPERATIONS

                    Year Ended December 31, 2005 Compared to
                        the Year Ended December 31, 2004

         Financial results for the year ended December 31, 2005 are not
comparable to financial results for the year ended December 31, 2004 as the
Company had limited operations related to start-up activities throughout most of
2004. The Company's oil and gas operations commenced in earnest with the
drilling of the Company's first operated well, the Lucille Pruett #1, which was
completed during November 2004. 2004 production and revenues for this well were
minimal. During the second half of 2004 and most of 2005, the Company also
received minimal revenues and incurred limited expenses for three marginal
non-operated wells that were sold in the fourth quarter of 2005. Late in 2005,
the Company completed and commenced sales from three additional new wells, the
Lucille Pruett #2H, Kirby #1 and Mitchell #1.

         Revenues from sales of oil and gas were $595,657 in 2005 as compared to
$116,137 in 2004, reflecting a full year of production from the Lucille Pruett
#1, initial sales late in 2005 from the three new wells and higher prices
received for both oil and gas. Production expenses for 2005, including severance
taxes, equaled $108,227 versus none recorded in 2004. The increased expenses
reflect costs associated with more wells to operate and maintain and higher
sales volumes. Exploration expenses of $360,170 in 2005 reflect the Company's
share of three dimensional seismic survey costs for acquiring data over Hill
County, Texas acreage leased by the Company. General and administrative expenses
increased from $745,955 in 2004 to $1,782,184 in 2005 reflecting a full year of
expanding business activities resulting in staff and services additions.
Depreciation, depletion and amortization charges increased from $97,965 to
$344,797 from 2004 to 2005, in line with the growth in production and revenues.
Impairment charges of $636,278 were taken against three properties in 2005
versus charges of $268,962 taken against one property in 2004. As a result of
the above revenues and expenses, 2005 operations incurred a loss of $2,635,999
as compared to a loss of $996,745 in 2004.

         Other income and expense items in 2005 included $359,490 in interest
income on cash balances and the loan to EBS and $339,355 in income from the sale
of the Company's interests in the three marginal wells discussed above and 467
undeveloped acres. Other expenses for 2004 netted to $40,014 with interest
expense of $141,983 partially offset by interest income of $50,704 and other
income from various items of $51,265.

         The Company incurred a net loss of $1,939,322, or $0.11 per share, for
the year ended December 31, 2005 as compared to a net loss of $1,036,759, or
$0.18 per share, for the year ended December 31, 2004.

                         LIQUIDITY AND CAPITAL RESOURCES

         >From the time that the Company changed its business focus to oil and
gas activities in February 2004 through the beginning of November 2004, the
Company financed its business through a series of financings that could be
regarded as involving "seed" capital or bridge financing. These financings were
undertaken to sustain the Company until it could raise additional long-term
capital. Many of these financings were funded in whole or in part by members of
the Company's management, either directly or through entities controlled by
them. This "seed" capital included a total of $1.11 million in debt financing,
all of which has either been repaid or converted into equity. In connection with
these borrowings, the Company granted warrants to purchase up to an aggregate of
820,000 shares of the Company's common stock for a per-share exercise price of
$.50. These warrants have a term of, and are exercisable for, five years. With
regard to equity financings, in February 2004 the Company raised "seed" capital
from management by selling to them, directly or through entities controlled by

                                       A-32
<PAGE>

them, a total of 4,080,000 shares of the Company's common stock for a per-share
purchase price of $.01. During the quarter ended June 30, 2004, the Company
completed a second round of equity financing by selling 385,500 units of the
Company's securities to a total of 17 accredited investors. Each unit was
comprised of two shares of the Company's common stock and a warrant to purchase
one share of the Company's common stock at a per share price of $2.50. The
warrants have a term of and are exercisable for two years. The purchase price
for a unit was $2.00, with the Company receiving aggregate offering proceeds of
$771,000 from the offering.

         On November 2, 2004, the Company completed the private placement of an
aggregate of 10,000,000 shares of its common stock, $.01 par value, at a price
of $2.00 per share. The cash offering resulted in $20 million in gross proceeds
and approximately $18.5 million in net proceeds to the Company after deducting
placement-related costs. The shares were issued to a total of 50 investors, all
of whom were accredited. The Company's placement agent received a placement fee
in the amount of $1,400,000, and was granted a five-year warrant to purchase
300,000 shares of common stock at a purchase price of $2.00 per share. A portion
of the proceeds from this private placement was used to retire indebtedness in
the aggregate original principal amount of $810,000 plus interest. All of this
indebtedness was either owed directly to members of the Company's management or
owed to entities controlled by members of the Company's management. Some of this
indebtedness was secured by all of the Company's assets, including the Company's
then current oil and gas interests as well as all such interests to be acquired
in the future. In connection with the payment of this indebtedness, the liens on
the Company's assets were released. In addition, in connection with the closing
of the private placement, a holder of a short-term convertible promissory note
having a principal balance of $300,000 converted the principal balance of the
promissory note into 150,000 shares of the Company's common stock.

         On January 9, 2006, the Company completed the private placement of an
aggregate of 3,278,000 shares of its common stock at a price of $3.15 per share
The cash offering resulted in $10,325,700 in gross proceeds and approximately
$9.5 million in net proceeds to the Company after deducting placement-related
costs. The shares were issued to a total of 27 investors, all of whom were
accredited.

         On March 15, 2006, the Company, as borrower, entered into a $45 million
four-year Advancing Term Credit Agreement (the "Credit Agreement") with GasRock
Capital LLC ("GasRock"), as lender. The Credit Agreement provides the terms
under which GasRock will make available to the Company a senior secured
revolving credit facility in an aggregate amount of up to $45 million.
Borrowings under the Credit Agreement may be used for the following purposes:

         1.       Up to $9.5 million may be used for closing costs pertaining to
                  the transaction, for approved drilling and for pipeline
                  expansion.

         2.       Up to $7.5 million may be used for the cash portion of an
                  earn-out agreement entered into in connection with the
                  Company's acquisition of all of the outstanding equity
                  interests (the "Equity Interests") in EBS Oil and Gas Partners
                  Production Company, L.P. and EBS Oil and Gas Partners
                  Operating Company, L.P. (collectively "EBS"), provided that
                  any amount advanced for payment of the earn-out agreement will
                  reduce dollar-for-dollar the amount available for the uses
                  described in purpose 4 below.




                                       A-33
<PAGE>


         3.       Up to $1.5 million may be used in certain circumstances for
                  the Company's overhead.

         4.       Up to an additional $34.0 million may be made available at
                  later dates (subject to GasRock's approval) for additional
                  exploitation of proved developed non-producing reserves,
                  additional lender-approved drilling of new wells, lease
                  acquisitions, pipeline expansion or seismic expenses.

In connection with the acquisition of the Equity Interests, the Company borrowed
$5.3 million under the Credit Agreement for the payment of cash at closing, the
retirement of a third party loan in the approximate amount of $1.6 million, the
reimbursement of costs associated with previous drilling, and future
developmental drilling.

         GasRock's commitments under the Credit Agreement will terminate on
March 14, 2009, unless terminated earlier by the Company upon repayment of all
outstanding amounts or by GasRock upon an event of default. To secure the
Company's obligations under the Credit Agreement, the Company granted a security
interest in all of its assets in favor of GasRock. The Credit Agreement also
requires hedging for a substantial portion of the the Company's reserves.
Amounts outstanding under the Credit Agreement will bear interest at an annual
rate equal to the greater of (a) twelve percent (12.0%) or (b) the one-month
London interbank offered rate (LIBOR), plus 6.50%. Eighty-five percent (85.0%)
of monthly revenue from oil & gas production and commodity hedging, net of
production operations related costs, will be applied to the repayment of the
indebtedness under the Credit Agreement, subject to the limited ability of the
Company to remit less than 85% and to retain more than 15% of monthly net
revenue to cover the Company's overhead. The Company will also pay a facility
fee equal to 2.0% of all advances, with the amount of such fee not paid at the
time of the advance but added to the outstanding principal balance and amortized
in accordance with the terms of the Credit Agreement. In consideration of
GasRock providing the financing under the Credit Agreement, GasRock received a
one percent (1.0%) overriding royalty interest in each lease held by the Company
as of the date of the execution of the Credit Agreement and a one and one-half
percent (1.5%) overriding royalty interest in each well and related unit (as
defined in the Credit Agreement) held by the Company as of the date of the
execution of the Credit Agreement. GasRock will also receive a one percent
(1.0%) overriding royalty interest in each producing well, each lease and any
related unit (as defined in the Credit Agreement) acquired during the term of
the Credit Agreement if the Company uses advances under the Credit Agreement to
acquire same. GasRock will also receive a one and one-half percent (1.5%)
overriding royalty interest in each well and related unit (as defined in the
Credit Agreement) if the Company uses advances under the Credit Agreement to
develop same. The Credit Agreement contains customary representations and
warranties, customary affirmative and negative covenants (including a maximum
leverage ratio), and customary events of default.

         Management believes that the proceeds from the January 9, 2006 private
placement of 3,278,000 shares, the amounts available under the Credit Agreement
and cash flow from operations will be sufficient to enable the Company to pursue
its business plan for the next 12 months.

          To conserve on the Company's capital requirements, the Company may in
the future issue shares in lieu of cash payments to employees and outside
consultants, as it has done on a limited basis in the past. Moreover, to
conserve on the Company's capital requirements, the Company intends to
occasionally seek other industry investors who are willing to participate in the
Company's oil and gas activities. The Company expects to retain a promotional
interest in these prospects, but generally the Company will fund a portion (and
sometimes a significant portion) of the acquisition and drilling costs. Also,
the Company may acquire interests in properties by issuing shares of its common
stock.

                                       A-34
<PAGE>

ITEM 7.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

         The report of Company's Independent Auditors appear at Page F-1 hereof,
and the Financial Statements of the Company appear at Page A-54 through A-69
hereof.

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

         Not applicable.

ITEM 8A. CONTROLS AND PROCEDURES

         The Company maintains disclosure controls and procedures that are
designed to ensure that information required to be disclosed in the Company's
Exchange Act reports is recorded, processed, summarized and reported within the
time periods specified in the SEC's rules and forms, and that such information
is accumulated and communicated to the Company's management, including its Chief
Executive Officer/Chief Financial Officer, as appropriate, to allow timely
decisions regarding required disclosure based closely on the definition of
"disclosure controls and procedures" in Rule 13a-14(c). In designing and
evaluating the disclosure controls and procedures, management recognized that
any controls and procedures, no matter how well designed and operated, can
provide only reasonable assurance of achieving the desired control objectives,
and management necessarily was required to apply its judgment in evaluating the
cost-benefit relationship of possible controls and procedures.

         The Company conducted an evaluation, under the supervision and with the
participation of the Chief Executive Officer and Chief Financial Officer, of the
effectiveness of the Company's disclosure controls and procedures (as defined in
Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 as
amended (the "Exchange Act")). Based on this evaluation, the Chief Executive
Officer and Chief Financial Officer concluded that the Company's disclosure
controls and procedures as of the end of the fiscal quarter covered by this
Annual Report on Form 10-KSB were effective at a reasonable assurance level to
ensure that information required to be disclosed by the Company in reports that
it files or submits under the Exchange Act is recorded, processed, summarized
and reported within the time periods specified in Securities and Exchange
Commission rules and forms.

         However, due to the limited number of Company employees engaged in the
authorization, recording, processing and reporting of transactions, there has
been an inherent lack of segregation of duties. The addition of accounting staff
as a result of the EBS transaction will, over time, substantially improve the
Company's ability to segregate duties. The Company has periodically assessed and
will continue to assess the cost versus benefit of adding the resources that
would remedy or mitigate this situation. As part of this on-going assessment and
as a result of an increase in the Company's financial ability and an increase in
expected number of transactions related to the Company's operations, the Company
hired a corporate controller during the first week of May 2005. Management does
not expect that the Company's disclosure controls and procedures will prevent or
detect all errors and fraud. Any control system, no matter how well designed and
operated, is based upon certain assumptions and can provide only reasonable, but
not absolute, assurance that its objectives will be met. Further, no evaluation
of controls can provide absolute assurance that misstatements due to errors or
fraud will not occur.

                                       A-35
<PAGE>

         There have been no significant changes in the Company's internal
controls or in other factors that could significantly affect the internal
controls subsequent to the date the Company completed its evaluation.

ITEM 8B. OTHER INFORMATION

         Not applicable.

                                    PART III.

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

                             DIRECTORS AND OFFICERS

         The directors and executive officers of the Company are as follows:

         Name                       Age        Positions

         Keith D. Spickelmier       44      Chairman of the Board

         Jimmy D. Wright            46      Director, Chief Executive
                                            Officer and Chief Financial Officer

         Douglas G. Manner          50      Director, Chief Operating Officer

         Craig S. Glick             46      Director and Chairman of the Audit
                                            Committee

         John T. Raymond            35      Director and Chairman of the
                                            Nominating Committee

         Herbert C. Williamson      57      Director and Chairman of the
                                            Compensation Committee

        Sean J. Austin              53      Vice President and Corporate
                                            Controller

         Keith D. Spickelmier has served as a Director of the Company since May
2002. He also served as the President, Treasurer & Secretary of the Company from
May 2002 until February 2004, at which time he resigned so that Jimmy D. Wright
could be elected as the Company's Chief Executive Officer. Mr. Spickelmier has
also served as an attorney in the capacities of Of Counsel and consultant to the
law firm of Haynes and Boone LLP from April 2001 through July 2003. He has also
engaged in personal investment activity during that time. Prior to that time,
Mr. Spickelmier had been a partner with the law firm of Verner, Liipfert,
Bernhard, McPherson and Hand since 1993. He has an undergraduate degree from the
University of Nebraska at Kearney and a law degree from the University of
Houston.

         Jimmy D. Wright has served as a Director and the Chief Executive
Officer and Chief Financial Officer of the Company since February 2004. He
continues to serve as the chief executive officer of several entities
wholly-owned by him (including Westside Resources, LP) holding investments in
oil, gas and related businesses, some of these entities being started as early
as August 2002. Mr. Wright has indicated that he does not intend to make any
further oil and gas investments through these or any other entities that would
be competitive with the Company's business pursuits. From June 2001 to July
2002, Mr. Wright served in several capacities with the EnergyClear organization,

                                       A-36
<PAGE>

first as Senior Vice President of EnergyClear Operating Corp., then the operator
of EnergyClear Corporation. He later was also elected as the President of
EnergyClear Corporation itself, then an over-the-counter energy clearinghouse
approved by the Commodity Futures Trading Commission. From February 1997 to June
2001, Mr. Wright held various senior management positions with Midcoast Energy
Resources Inc., which merged into Enbridge, Inc., a publicly traded company.
When he left this organization, Mr. Wright held the position of Chief Executive
Officer of an International subsidiary of Enbridge Energy Partners, LP., also a
publicly traded company. Mr. Wright holds a Bachelor of Science degree in
Mechanical Engineering from the University of Memphis.

         Effective March 30, 2005, Douglas G. Manner was elected to the
Company's Board of Directors. On December 8, 2005, effective January 1, 2006,
Douglas G. Manner was appointed as the Company's Chief Operating Officer. Prior
to being appointed as the Company's Chief Operating Officer, Mr. Manner served
as Senior Vice President and Chief Operating Officer of Kosmos Energy, LLC,
which is a private energy company exploring for oil and gas in the offshore
regions of West Africa. Mr. Manner joined Kosmos Energy in January 2004. Prior
to Kosmos Energy, Mr. Manner served as President and Chief Operating Officer of
White Stone Energy, a Houston based oil and gas advisory firm from August 2002
until December, 2003. From May 2001 until June 2002, Mr. Manner served as
Chairman and Chief Executive Officer of Mission Resources, and he previously
served as Chief Executive Officer and President of Bellwether Exploration, one
of Mission's predecessor companies, from June 2000 until May 2001. Mr. Manner
was named Chairman of the Board at Bellwether in December 2000. Bellwether was
comprised of core domestic assets as well as operations in Ecuador and the
Ukraine. Mr. Manner joined Bellwether in May 2000 from Gulf Canada Resources
Limited where he served as Vice President and Chief Operating Officer from July
1998 through May 2000. Mr. Manner's previous experience includes 15 years (1981
through 1996) with Ryder Scott Petroleum Engineers, an international independent
reservoir engineering firm. He joined the company as a consulting reservoir
engineer in 1981. Mr. Manner has served on the boards of directors for Gulf
Midstream Service, ROC Oil and Petrovera Energy Company. In addition to serving
on our board, Mr. Manner also serves on the Board of Directors of Cordero
Energy, Zenas Energy and Rio Vista Energy Partners, L.P. Mr. Manner received a
Bachelor's of Science degree in mechanical engineering from Rice University in
1977. He is a professional engineer certified by the Texas Board of Professional
Engineers, and he is a member of the Society of Petroleum Engineers.

         Effective March 30, 2005, John T. Raymond was elected to the Company's
Board of Directors. Mr. Raymond currently manages various investments through
Lynx Holdings, a private company of which he is the owner and Chief Executive
Officer. Mr. Raymond has served as a director of Vulcan Energy Corporation since
July 2004, and he served as the Chief Executive Officer of Vulcan Energy from
July 2004 to April 2005. Mr. Raymond also served as President and Chief
Executive Officer of Plains Resources Inc., the predecessor company to Vulcan
Energy, from December 2002 to April 2005. Prior thereto, Mr. Raymond served as
Executive Vice President and Chief Operating Officer of Plains Resources from
May 2001 to November 2001 and President and Chief Operating Officer from
November 2001 to April 2005. Mr. Raymond also served as President and Chief
Operating Officer of Plains Exploration and Production from December 2002 to
March 2004. Mr. Raymond also served as a director of Plains All American from
June 2001 to April 2005. He was Director of Corporate Development of Kinder
Morgan, Inc. from January 2000 to May 2001. He served as Vice President of
Corporate Development of Ocean Energy, Inc. from April 1998 to January 2000. He
was a Vice President with Howard Weil Labouisse Friedrichs, Inc. from 1992 to
April 1998. Mr. Raymond earned his Bachelor of Science in management at the
Tulane University AB Freeman School of Business.

                                       A-37
<PAGE>

         Effective March 30, 2005, Herbert C. Williamson was elected to the
Company's Board of Directors. Mr. Williamson has over 30 years of experience in
the oil and gas industry and investment banking business. He has served on the
board of Mission Resources Corp. since November of 2002. From April 1997 to
February 2002, Mr. Williamson served as director of Pure Resources, Inc. and its
predecessor, and during this tenure he served as chairman of the special
committee in connection with the tender offer made by Unocal. >From September
2000 through March 2003, he was also a director of Southwest Royalties, Inc. and
during this tenure he was chairman of the independent directors committee for
that company's sale to Clayton Williams Energy. Since 1996, Mr. Williamson has
also served as a director of Merlon Petroleum Company, a private oil and gas
company engaged in exploration and production in East Texas and Egypt, and Mr.
Williamson had previously served as the chief financial officer of this company.
From April 1985 through April 1995, Mr. Williamson served as vice chairman and
executive vice president for Parker & Parsley Petroleum Company, now Pioneer
Natural Resources Company, and from October 1998 to April 1999, he served as
chief financial officer with Seven Seas Petroleum. From April 1995 through May
1999, Mr. Williamson was an investment banker with Petrie Parkman & Company and
prior to that he was a director in the Energy Group at C S First Boston. Mr.
Williamson earned a Bachelor of Arts degree from Ohio Wesleyan University and a
Master of Business Administration from Harvard University.

         Effective January 23, 2006, Craig S. Glick was elected to the Company's
Board of Directors. Mr. Glick is currently a Partner at Kosmos Energy, which is
a private energy company that Mr. Glick helped found in 2003 and which
concentrates on exploring for oil and gas in the offshore regions of West
Africa. From 1999 to 2003, Mr. Glick was President of Hunt Resources, Inc. and
Senior Vice President of Hunt Oil Company. During the period from 1994 to 1999,
he was General Counsel and Chief Financial Officer of Gulf Canada. In 1994, Mr.
Glick was in charge of acquisitions for Torch Energy. He began his career as an
attorney with Vinson & Elkins, LLP in the Business Transactions Practice where
he made Partner in 1993. Glick obtained his Doctorate of Jurisprudence from The
University of Texas School of Law in 1985.

         Effective May 4, 2005, Sean J. Austin was appointed as Vice President
and Corporate Controller of the Company. Prior to joining the Company, Mr.
Austin spent 23 years with Amerada Hess (NYSE: AHC) holding senior management
positions in the company's New York and Houston offices. Most recently, from
1999 until 2004, Mr. Austin served as Vice President, Finance and
Administration, Exploration and Production for Amerada Hess in Houston. From
1995 to 1999, he served as Vice President and Corporate Controller in the New
York office. Prior to joining Amerada Hess, Mr. Austin served from 1974 to 1979
as an officer in the United States Navy. He holds a Bachelors degree in
Accounting from the University of Notre Dame and a Master of Business
Administration degree from the Amos Tuck School of Business at Dartmouth
College.

         The authorized number of directors of the Company is presently fixed at
six. Each director serves for a term of one year that expires at the following
annual stockholders' meeting. Executive officers are appointed by the Board of
Directors and serve until their successors are appointed. There are no family
relationships, or other arrangements or understandings between or among any of
the directors, executive officers or other person pursuant to which such person
was selected to serve as a director or officer.

         The Board of Directors has established an Audit Committee. The Audit
Committee supervises the financial affairs of the Company and generally reviews
the results and scope of the audit and other services provided by the Company's
independent accountants and reports the results of their review to the Board and
to the Company's management. Currently the Audit Committee consists of Herbert
C. Williamson, Craig S. Glick and John T. Raymond. The Company's Board of
Directors has determined that each of Herbert C. Williamson, Craig S. Glick and
John T. Raymond is an "audit committee financial expert," as defined by
applicable Commission rules and regulations.

                                       A-38
<PAGE>

                                 CODE OF ETHICS

         On March 31, 2004, the Company adopted a Code of Ethics that applies to
the Company's principal executive officer, principal financial officer and
principal accounting officer. The Code of Ethics is posted on the Company's
website, and anyone can obtain a copy of the Code of Ethics by contacting the
Company at the following address: 4400 Post Oak Parkway Suite 2530, Houston, TX
77027, attention: President and Chief Executive Officer, telephone: (713)
979-2660. The first such copy will be provided without charge. The Company will
post on the Company's website any amendments to the Code of Ethics, as well as
any waivers that are required to be disclosed by the rules of either the
Securities and Exchange Commission or the National Association of Dealers.

                        SECTION 16(A) OF THE EXCHANGE ACT

         Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires that the Company's officers and directors, and persons
who own more than ten percent of a registered class of the Company's equity
securities, file reports of ownership and changes in ownership with the
Securities and Exchange Commission and furnish the Company with copies of all
such Section 16(a) forms. Each of the Company's three directors newly-elected
during fiscal 2005 filed his Form 3 slightly late. Each of Herbert C. Williamson
and John T. Raymond filed his Form 3 two business days after the end of the
10-day filing period, while Douglas G. Manner filed his Form 3 one week after
the end of the 10-day filing period. Keith D. Spickelmier failed to file timely
a Form 4 or Form 5 regarding year-end gifts exempt from Section 16 of the
Exchange Act of an aggregate of 6,800 shares to two of his family members. Based
solely on its review of written representations from certain reporting person,
the Company believes that, during fiscal 2005, each of its officers, directors
and greater than ten percent stockholders otherwise complied with all applicable
filing requirements of Section 16(a).

ITEM 10.  EXECUTIVE COMPENSATION.

                           Summary Compensation Table

         The following table sets forth the compensation paid by the Company to
its Chief Executive Officer for services in all capacities during the fiscal
years ended December 31, 2005 and December 31, 2004, and to its Vice
President/Corporate Controller during the fiscal year ended December 31, 2005
(no other executive officer of the Company had total annual salary and bonus for
the fiscal years ended December 31, 2005 or 2004 exceeding $100,000, and no
executive officer of the Company received any remuneration for the fiscal year
ended December 31, 2003.) For purposes hereof, the officers of the Company
listed in the table below are referred to herein as the "Named Executive
Officers."

                                       A-39
<PAGE>



<PAGE>


                         Summary Compensation Table (1)

                                Annual Long-Term
                            Compensation Compensation

      (a)               (b)            (c)            (d)             (f)
                       Fiscal                                     Restricted
Name and               Year                                          Stock
Principal Position     Ended         Salary          Bonus          Awards


Jimmy D. Wright        12/31/05     $150,000           $0              $0
Chief Executive        12/31/04      $25,000 (2)       $0              $0
Officer

Sean J. Austin         12/31/05      $92,167 (3)    $20,000 (4)    $80,000 (5)
Vice President and
Corporate Controller

         (1)      The Columns designated by the Commission for the reporting of
                  certain other annual compensation, securities underlying
                  options/SARs, long term incentive plan payouts, and all other
                  compensation, have been eliminated as no such other annual
                  compensation, underlying securities, payouts or compensation
                  were awarded to, earned by, paid to or outstanding with
                  respect to any specified person during any fiscal year covered
                  by the table.
         (2)      Mr. Wright started receiving his salary on November 1, 2004.
                  Prior to that time, he worked without remuneration.
         (3)      Mr. Austin became Vice President and Corporate Controller on
                  May 4, 2005.
         (4)      In connection with Mr. Austin's employment, the Company
                  granted to him a sign-on bonus of 5,000 shares. The figure in
                  the table is based on the 5,000 shares granted multiplied by
                  $4.00, the closing price of the Company's stock prior to the
                  date of grant. These 5,000 shares had a value of $16,100 as of
                  March 23, 2006, based on the $3.22 closing price of the
                  Company's stock on that date
         (5)      In connection with Mr. Austin's employment, the Company
                  granted to him 20,000 restricted shares. These restricted
                  shares are subject to vesting. Of these shares, 10,000 may
                  become vested on the anniversary date of the employment
                  agreement (subject to Mr. Austin's continued employment), and
                  10,000 may become vested on the second anniversary date of the
                  employment agreement (subject to Mr. Austin's continued
                  employment). The figure in the table is based on the 20,000
                  restricted shares granted multiplied by $4.00, the closing
                  price of the Company's stock prior to the date of grant. These
                  20,000 restricted shares had a value of $64,400 as of March
                  23, 2006, based on the $3.22 closing price of the Company's
                  stock on that date.

                             Stock Option/SAR Grants

         During the fiscal year ended December 31, 2005, the Company did not
grant any stock options or stock appreciation rights to any Named Executive
Officers.

                   Option/SAR Exercises and Option/SAR Values

         During the fiscal year ended December 31, 2005, no Named Executive
Officers exercised any stock options to acquire shares of the Company's stock or
any stock appreciation rights. As of December 31, 2005, no Named Executive
Officers held any stock options to acquire shares of the Company's stock or any
stock appreciation rights that were (in either case) awarded as compensation.

                                       A-40
<PAGE>

        Compensation and Change in Control Agreements with Key Personnel

         Commencing November 1, 2004, the Company began paying an annual salary
in the amount of $150,000 to Jimmy D. Wright for serving as the Company's Chief
Executive Officer and Chief Financial Officer. This salary is subject to
increase, decrease or elimination at any time and for any reason at the
discretion of the Company's Board of Directors. In addition, commencing November
1, 2004, the Company engaged Keith D. Spickelmier, the Company's Chairman of the
Board, as a consultant and began paying to him a monthly consulting fee in the
amount of $6,000. This consulting engagement is terminable at the will of either
the Company or Mr. Spickelmier, and the consulting fee is subject to increase,
decrease or elimination at any time and for any reason at the discretion of the
Company's Board of Directors. Neither of Messrs. Wright or Spickelmier has
entered into a written employment or consulting agreement or a covenant not to
compete agreement with the Company. As a result, each of Messrs. Wright and
Spickelmier may discontinue providing services to the Company at any time and
for any reason, and even thereafter commence competition with the Company.
Conversely, the Company may discontinue employing or engaging either of Messrs.
Wright or Spickelmier at any time and for any reason at the discretion of the
Company's Board of Directors. However, in view of the current composition of the
Company's Board of Directors (which includes each of Messrs. Wright and
Spickelmier), the Company's discontinuation of either of Mr. Wright's employment
or Mr. Spickelmier's consulting engagement is not likely in the foreseeable
future.

         The Company has entered into an employment agreement (the "Manner
Employment Agreement") with Douglas G. Manner, a director and the Company's
Chief Operating Officer, effective January 1, 2006. The Manner Employment
Agreement has a two-year term, subject to earlier termination by the Company
upon certain customary events and by Mr. Manner upon certain events amounting to
a sale of the Company (such events being referred to hereinafter as a "Change of
Control"). Under the Manner Employment Agreement, Mr. Manner is to receive an
annual salary of $175,000. Furthermore, per the Manner Employment Agreement, the
Company agreed to issue to Mr. Manner as a sign-on bonus a number of shares of
the Company's common stock (the shares comprising the sign-on stock bonus are
referred to hereinafter as the "Bonus Shares") equal to one and one-half times
the number of any such shares that Mr. Manner purchases for cash directly from
the Company at any time on or before March 31, 2006 unless extended, up to a
maximum of 225,000 Bonus Shares. Of these Bonus Shares, one-third will vest
immediately, one-third may become vested on the first anniversary date of the
Manner Employment Agreement (subject to Mr. Manner's continued employment), and
one-third may become vested on the second anniversary date of the Manner
Employment Agreement (subject to Mr. Manner's continued employment). All of the
Bonus Shares shall immediately vest upon Mr. Manner's termination of the Manner
Employment Agreement after a Change of Control. Moreover, per the Manner
Employment Agreement, the Company agreed to issue to Mr. Manner as additional
bonuses 100,000 shares (for an aggregate total of 600,000 shares) of the
Company's common stock ("Additional Bonus Shares") each time that the 30-day
trailing average of the Company's common stock closing price equals or exceeds
for the first time each of the following figures: $5.00, $6.00, $7.00, $8.00,
$9.00 and $10.00. Upon Mr. Manner's termination of the Manner Employment
Agreement after a Change of Control, Mr. Manner shall be entitled to be issued
immediately all of the 600,000 Additional Bonus Shares that have not already
been issued. The issuance of any Bonus Shares or Additional Bonus Shares is
subject to regulatory compliance. Mr. Manner is also entitled to participate in
any and all employee benefit plans now existing or hereafter established for the
Company's employees, provided that he meets the eligibility criterion therefor.

                                       A-41
<PAGE>

         The Company has entered into an employment agreement (as amended the
"Austin Employment Agreement") with Sean J. Austin, a Vice President and the
Corporate Controller. The Austin Employment Agreement has an indefinite term.
Under the Austin Employment Agreement, Mr. Austin is to receive an annual salary
of $140,000, subject to annual review. Furthermore, per the Austin Employment
Agreement, Mr. Austin received a stock grant with respect to 25,000 shares of
the Company's common. Of these shares, 5,000 vested immediately, 10,000 may
become vested on the first anniversary date of the Austin Employment Agreement
(subject to Mr. Austin's continued employment), and 10,000 may become vested on
the second anniversary date of the Austin Employment Agreement (subject to Mr.
Austin's continued employment). Moreover, the Company and Mr. Austin entered
into an amendment to the Austin Employment Agreement whereby the Company would
agree to issue to Mr. Austin as additional bonuses 20,000 shares (for an
aggregate total of 120,000 shares) of the Company's common stock each time that
the 30-day trailing average of the Company's common stock closing price equals
or exceeds for the first time each of the following figures: $5.00, $6.00,
$7.00, $8.00, $9.00 and $10.00. Such amendment would provide that, upon Mr.
Austin's termination of the Austin Employment Agreement after a Change of
Control, Mr. Austin shall be entitled to be issued immediately all of the
120,000 shares that have not already been issued. The issuance of any of the
preceding shares would be subject to regulatory compliance. Mr. Austin is also
entitled to participate in any and all employee benefit plans hereafter
established for the Company's employees.

                              Director Compensation

         Each member of the Company's Board of Directors who is not an employee
of Westside or any of its affiliates (a "Non-Employee Director") is eligible to
receive awards of the Company's Common Stock under the Company's 2005 Director
Stock Plan. Each Non-Employee Director receives an award of 12,666 shares of
Common Stock when he or she first becomes a director. Of these shares, 4,222 are
unrestricted, and the remaining 8,444 shares are restricted, with one-half of
them vesting one year after the award and with one-half of them vesting two
years after the award, provided, in both cases, that the related person is still
a director of the Company on the vesting dates. In addition to the initial
grant, each Non-Employee Director receives an annual award of 2,650 shares of
the Company's Common Stock. Of these shares, 884 are unrestricted, and the
remaining 1,766 are restricted, with one-half of them vesting one year after the
award and with one-half of them vesting two years after the award, provided, in
both cases, that the related person is still a director of the Company on the
vesting dates.

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

                           BENEFICIAL OWNERSHIP TABLE

         The following table sets forth as of March 27, 2006, the number of
shares of the Company's Common Stock beneficially owned by (i) each director of
the Company; (ii) each of the Company's executive officers; (iii) each person
known by the Company to beneficially own more than 5% of the outstanding shares
of Common Stock; and (iv) all executive officers and directors as a group.
Unless otherwise indicated, each person has sole voting and dispositive power
over such shares. Shares not outstanding but deemed beneficially owned by virtue
of the right of a person or member of a group to acquire them within 60 days are
treated as outstanding only when determining the amount and percent owned by
such group or person. Unless otherwise indicated, the address for each person
named in the table is 4400 Post Oak Parkway, Suite 2530, Houston, Texas 77027.




                                       A-42
<PAGE>



         Name and Address of                    Beneficial Ownership (1)
         Beneficial Owner                      Number           Percent

         Westside Resources, L.P.             3,435,693 (2)    16.4%

         Jimmy D. Wright                      3,435,693 (3)    16.4%

         Keith D. Spickelmier                 2,636,260 (4)    12.6%

         Douglas G. Manner                       62,666 (5)      *

         John T. Raymond                         62,666          *

         Herbert C. Williamson                   12,666          *

         Craig S. Glick                          42,666          *

         Sean J. Austin                          25,000 (6)      *

         All directors and officers           6,277,617 (7)    29.5%
         as a group (seven persons)

         Wellington Management Company, LLP   3,973,480 (8)    19.2%
         75 State St
         Boston, MA  02109

         Spindrift Investors (Bermuda) L.P.   1,617,580 (9)     7.8%
         Clarendon House, 2 Church Street
         Hamilton, Bermuda

         Spindrift Partners,  L.P.            1,377,200 (10)    6.7%
         75 State St
         Boston, MA  02109

*        Less than one percent

         (1)      Includes shares beneficially owned pursuant to options and
                  warrants exercisable within 60 days.
         (2)      Includes 3,144,585 shares held directly and 291,108 shares
                  that may be purchased pursuant to warrants that are currently
                  exercisable. Jimmy D. Wright has sole voting power and sole
                  investment power over these shares. These shares are also
                  included in the table in the figure of shares beneficially
                  owned by Mr. Wright.
         (3)      All of these shares are held by Westside Resources, L.P., an
                  entity
                  over which Mr. Wright has complete control. Accordingly, Mr.
                  Wright has sole voting power and sole investment power over
                  these shares. These shares are also included in the table in
                  the figure of shares beneficially owned by Westside Resources,
                  L.P.
         (4)      Includes 2,332,368 shares held directly and 303,892 shares
                  that may be purchased pursuant to warrants that are currently
                  exercisable.
         (5)      Does not include 150,000 shares that may be sold to Mr. Manner
                  in a private placement upon the completion of regulatory
                  compliance pertaining to the sale, 225,000 shares that may be
                  issued as an
                  employee sign-on bonus and a currently indeterminable number
                  of shares(up to 600,000) that may be issued as an additional
                  performance bonus.
         (6)      Does not include 29,972 shares that may be sold to Mr. Austin
                  in a private placement upon the completion of regulatory
                  compliance
                  pertaining to the sale, and a currently indeterminable number
                  of shares(up to 120,000) that may be issued as an additional
                  performance bonus.

                                       A-43
<PAGE>

         (7)      Includes 2,538,032 shares held directly, 3,144,585 shares held
                  by a related entity, and 595,000 shares that may be purchased
                  pursuant to warrants that are currently exercisable; does not
                  include 179,972 shares that may be sold to Messrs. Manner and
                  Austin in a private placement upon the completion of
                  regulatory compliance pertaining to, 225,000 shares that may
                  be issued to Mr. Manner as an employee sign-on bonus (which
                  shares will be subject to vesting and the risk of forfeiture),
                  a currently indeterminable number of shares (up to 600,000)
                  that may be issued to Mr. Manner as an additional performance
                  bonus, or a currently indeterminable number of shares (up to
                  120,000) that may be issued to Mr. Austin as an additional
                  performance bonus.
         (8)      Wellington Management Company, LLP ("WMC") has filed with the
                  Commission on January 10, 2006 an amendment to its Schedule
                  13G
                  respecting its beneficial ownership indicating that it is a
                  registered investment advisor. WMC has advised the Company
                  that clients of WMC are the record holders of all of the
                  3,973,480 shares reflected in the table. However, in its
                  capacity as investment advisor, WMC may be deemed to own
                  beneficially all of the 3,973,480 shares reflected in the
                  table. Of these shares, 1,617,580 shares are also included in
                  the table in the figure of shares beneficially owned by
                  Spindrift Investors (Bermuda) L.P., and 1,377,200 shares are
                  also included in the table in the figure of shares
                  beneficially owned by Spindrift Partners, L.P.
         (9)      Wellington Management Company, LLP ("WMC") acts as investment
                  adviser to this beneficial owner. In such capacity, Wellington
                  holds voting and dispositive power over the shares held by
                  this beneficial owner and, therefore, is deemed to share
                  beneficial ownership of the shares. These 1,617,580 shares are
                  also included in the table in the figure of shares
                  beneficially owned by WMC.
         (10)     Wellington Management Company, LLP ("WMC") acts as investment
                  adviser to this beneficial owner. In such capacity, Wellington
                  holds voting and dispositive power over the shares held by
                  this beneficial owner and, therefore, is deemed to share
                  beneficial ownership of the shares. These 1,377,200 shares are
                  also included in the table in the figure of shares
                  beneficially owned by WMC.

                            EQUITY COMPENSATION PLANS

         The Company has two equity compensation plans for its directors and
consultants pursuant to which options, rights or shares may be granted or
issued. These plans include the Company's 2004 Consultant Compensation Plan (the
"Consultant Plan") and the Company's 2005 Director Stock Plan (the "Director
Plan"). In accordance with requirements of the U.S. Securities and Exchange
Commission, further information on the material terms of the Consultant
Compensation is given below.

         The following table provides information as of December 31, 2005 with
respect to our compensation plans (including individual compensation
arrangements), under which securities are authorized for issuance aggregated as
to (i) compensation plans previously approved by stockholders, and (ii)
compensation plans not previously approved by stockholders:




                                       A-44
<PAGE>



                      Equity Compensation Plan Information

                                                            Number of securities
                                                            remaining available
                                                            for future issuance
                    Number of securities  Weighted-average  under equity
                    to be issued upon     exercise price of compensation plans
                    exercise of out-      outstanding       (excluding
                    standing options,     options, warrants securities reflect-
                    warrants and rights   and rights        ed in column (a))
Plan category               (a)                   (b)                (c)

Equity compensation      -0-                   -0-                -0-
plans approved by
security holders

Equity compensation      -0-                   -0-              3,210,084
plans not approved by
security holders

Total                    -0-                   -0-              3,210,084 (1)


         (1)      Of these shares, 2,748,082 shares and 462,002 shares remain
                  available for issuance under the Company's 2004 Consultant
                  Compensation Plan and the Company's 2005 Director Stock Plan,
                  respectively.

                   Company's 2004 Consultant Compensation Plan

         The following is a description of the material features of the
Consultant Plan

         General. On April 14, 2004, the Company's Board of Directors approved
the Consultant Plan. The Consultant Plan provides for the grant of shares of the
Company's Common Stock to certain outside consultants of the Company who assist
in the development and success of the business of the Company to reward them for
their services and to encourage them to continue to provide services to the
Company.

         Administration. The Company's Board of Directors administers the
Consultant Plan.

         Eligibility. The Board of Directors has substantial discretion pursuant
to the Consultant Plan to determine the persons to whom shares of Common Stock
are awarded and the amounts and restrictions imposed in connection therewith.
Under the Consultant Plan, awards may be made only to individuals who are
outside consultants, or directors, officers, partners or employees of outside
consultants, of the Company or a subsidiary. The number of consultants employed
by the Company varies.

         Shares Subject to the Consultant Plan. Three million (3,000,000) shares
of Common Stock are authorized to be awarded pursuant to the Consultant Plan,
500,000 of which were registered with the U.S. Securities and Exchange
Commission. Any shares awarded and later forfeited are again subject to award or
sale under the Consultant Plan. Awards may be made pursuant to the Consultant
Plan until no further shares are available for issuance or until April 15, 2014,
whichever occurs first.

         Previous  Awards.  The Company has awarded  251,918 shares of Common
Stock pursuant to the Consultant  Plan as of December 31, 2005.

                                       A-45
<PAGE>

         Restrictions. The Board may, in its discretion, place restrictions and
conditions in connection with any particular award of shares pursuant to the
Consultant Plan. Shares awarded subject to a condition are, in general,
non-assignable until the condition is satisfied.

         Anti-dilution. The Consultant Plan carries certain anti-dilution
provisions concerning stock dividends, stock splits, consolidations, mergers,
recapitalizations and reorganizations.

         Amendment and Termination. The Company's Board of Directors may
terminate or amend the Consultant Plan in any respect at any time, except no
action of the Company's Board of Directors, or the Company's stockholders, may,
without the consent of a participant, alter or impair such participant's rights
under any restricted shares previously granted.

         Term. The Consultant Plan shall expire on April 15, 2014 unless sooner
terminated except as to restricted share grants outstanding on that date.

         Federal Income Tax Consequences. The following brief summary of the
principal Federal income tax consequences of transactions under the Consultant
Plan is based on current Federal income tax laws. This summary is not intended
to constitute tax advice and, among other things, does not address possible
state or local tax consequences. Accordingly, a participant in the Consultant
Plan should consult a tax advisor with respect to the tax aspects of
transactions under the Consultant Plan.

         - Unrestricted  Stock Grants.  The tax consequences of unrestricted
stock awards will depend on the specific terms of each award.

         - Restricted Stock Grants. Upon receipt of restricted stock, a
participant generally will recognize taxable ordinary income when the shares
cease to be subject to restrictions in an amount equal to the fair market value
of the shares at such time. However, no later than 30 days after a participant
receives the restricted stock, the participant may elect to recognize taxable
ordinary income in an amount equal to the fair market value of the shares at the
time of receipt. Provided that the election is made in a timely manner, when the
restrictions on the shares lapse, the participant will not recognize any
additional income. If the participant forfeits the shares to the Company (e.g.,
upon the participant's termination prior to expiration of the restriction
period), the participant may not claim a deduction with respect to the income
recognized as a result of the election. Dividends paid with respect to shares of
restricted stock generally will be taxable as ordinary income to the participant
at the time the dividends are received.

         - Tax Consequences to the Company. The Company generally will be
entitled to a deduction at the same time and in the same amount as a participant
recognizes ordinary income, subject to the limitations imposed under Section
162(m).

         - Tax Withholding. The Company has the right to deduct withholding
taxes from any payments made pursuant to the Consultant Plan or to make such
other provisions as it deems necessary or appropriate to satisfy its obligations
to withhold federal, state or local income or other taxes incurred by reason of
payment or the issuance of Common Stock under the Consultant Plan or the lapse
of restrictions on grants upon which restrictions have been placed.





                                       A-46
<PAGE>



                     Company's 2005 Director Stock Plan

         The following is a description of the material features of the Director
Plan.

         General. Effective March 30, 2005, the Company's Board of Directors
adopted the Director Plan. The Director Plan provides for the grant of shares of
the Company's Common Stock to non-employee members of the Board of Directors to
provide them with incentives to work hard for the success of the Company.

         Administration. The Company's Board of Directors administers the
Director Plan.

         Eligibility. Under the Director Plan, awards may be made only to
members of the Company's Board of Directors who are not employees of the Company
or any of its affiliates ("Non-Employee Directors").

         Shares Subject to the Director Plan. Five hundred thousand (500,000)
shares of Common Stock are authorized to be awarded pursuant to the Director
Plan. Awards may be made pursuant to the Director Plan until no further shares
are available for issuance or until March 30, 2015, whichever occurs first.

         Awards. Each Non-Employee Director receives an award of 12,666 shares
of Common Stock when he or she first becomes a director. Of these shares, 4,222
are unrestricted, and the remaining 8,444 shares are restricted, with one-half
of them vesting one year after the award and with one-half of them vesting two
years after the award, provided, in both cases, that the related person is still
a director of the Company on the vesting dates. In addition to the initial
grant, each Non-Employee Director receives an annual award of 2,650 shares of
the Company's Common Stock. Of these shares, 884 are unrestricted, and the
remaining 1,766 are restricted, with one-half of them vesting one year after the
award and with one-half of them vesting two years after the award, provided, in
both cases, that the related person is still a director of the Company on the
vesting dates. The Company has awarded 37,998 shares of Common Stock pursuant to
the Director Plan as of December 31, 2005.

         Restrictions. The restricted shares comprising a grant are
non-assignable until such shares are vested and no longer subject to forfeiture.

         Anti-dilution. The Director Plan carries certain anti-dilution
provisions concerning stock dividends, stock splits, consolidations, mergers,
recapitalizations and reorganizations.

         Amendment and Termination. The Company's Board of Directors may
terminate or amend the Director Plan in any respect at any time, provided that
no alteration or amendment may be made without the approval of stockholders if
such approval is required by applicable law or stock exchange rule.

         Term. The Director Plan shall expire on March 30, 2015 unless sooner
terminated except as to restricted share grants outstanding on that date.

         Federal Income Tax Consequences. The following brief summary of the
principal Federal income tax consequences of transactions under the Director
Plan is based on current Federal income tax laws. This summary is not intended
to constitute tax advice and, among other things, does not address possible
state or local tax consequences. Accordingly, a participant in the Director Plan
should consult a tax advisor with respect to the tax aspects of transactions
under the Director Plan.

         - Unrestricted Stock Grants. The tax consequences of the unrestricted
shares comprising a grant will depend on the specific terms of each award.

                                       A-47
<PAGE>

         - Restricted Stock Grants. With regard to the restricted shares, a
participant generally will recognize taxable ordinary income when the shares
cease to be subject to restrictions in an amount equal to the fair market value
of the shares at such time. However, no later than 30 days after a participant
receives the restricted shares, the participant may elect to recognize taxable
ordinary income in an amount equal to the fair market value of the shares at the
time of receipt. Provided that the election is made in a timely manner, when the
restrictions on the shares lapse, the participant will not recognize any
additional income. If the participant forfeits the shares to the Company (e.g.,
upon the participant's termination prior to expiration of the restriction
period), the participant may not claim a deduction with respect to the income
recognized as a result of the election. Dividends paid with respect to shares of
restricted shares generally will be taxable as ordinary income to the
participant at the time the dividends are received.

         - Tax Consequences to the Company. The Company generally will be
entitled to a deduction at the same time and in the same amount as a participant
recognizes ordinary income, subject to the limitations imposed under Section
162(m).

         - Tax Withholding. The Company has the right to deduct withholding
taxes from any payments made pursuant to the Director Plan or to make such other
provisions as it deems necessary or appropriate to satisfy its obligations to
withhold federal, state or local income or other taxes incurred by reason of
payment or the issuance of Common Stock under the Director Plan or the lapse of
restrictions on grants upon which restrictions have been place.

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

         On April 30, 2004, the Company borrowed $130,000 from Bering Partners
No. 2, LLC ("Bering"), an entity whose equity owners included Westside
Resources, L.P. (the "Partnership"), an entity wholly-owned by Jimmy D. Wright
and formerly named "Westside Energy, L.P." (a director of the Company and the
Company's Chief Executive Officer and Chief Financial Officer), Keith D.
Spickelmier (the Company's Chairman of the Board), and one other accredited
investors. The loan was secured by all of the Company's assets, and interest
accrued at a rate of 10% per annum. In consideration of making the loans, the
Company granted warrants to the owners of Bering Partners No. 2, LLC to purchase
up to an aggregate of 260,000 shares of the Company's common stock for a
per-share exercise price of $.50. These warrants have a term of and are
exercisable for five years. All of the preceding indebtedness has been paid in
full.

         Moreover, between the middle of September 2004 through the middle of
October 2004, the Company issued to three accredited investors a total of five
unsecured short-term convertible promissory notes in the aggregate original
principal amount of $700,000. These accredited investors included Mr.
Spickelmier, the Partnership and a new investor in the Company (the "New
Investor"). Each of Mr. Spickelmier and the Partnership provided $200,000 of the
$700,000 aggregate amount, while the New Investor provided $300,000. Interest
accrued on the loans at a rate of 10% per annum. The notes were convertible into
shares of the Company's stock at a rate of one share for every $2.00 of
indebtedness. The New Investor converted his note in original principal amount
of $300,000 into 150,000 shares. The indebtedness owed to each of Mr.
Spickelmier and the Partnership has been paid in full without conversion.

         During the quarter ended June 30, 2004, the Company sold 385,500 units
of the Company's securities to a total of 17 accredited investors. Each unit was
comprised of two shares of the Company's common stock and a warrant to purchase
one share of the Company's common stock at a per share price of $2.50. The
purchase price for a unit was $2.00. The Partnership acquired 37,500 units for
an aggregate purchase price of $75,000.

                                       A-48
<PAGE>

         On January 9, 2005, the Company sold 3,278,000 shares of its common at
a price of $3.15 per share to a total of 27 accredited investors. Sara Paschall
Dodd, the wife of Mr. Spickelmier, acquired 95,000 shares for an aggregate
purchase price of $299,250. Two trusts established for the benefit of two of Ms.
Dodd's sons acquired shares in this offering. Each trust acquired 23,000 shares
for an aggregate purchase price of $72,450, for a total of 46,000 shares and a
total aggregate purchase price of $144,900.

                                    PART IV.

ITEM 13.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.

(a) Documents filed as part of this report:

(i) Consolidated Financial Statements:

         Report of Independent Auditors .................................A-53

         Balance Sheet as of December 31, 2005 ......................... A-54

         Statements of Income for the years ended December 31,
            2005 and 2004 ............ ................................. A-55

         Statements of Stockholders' Equity for the years ended
            December 31, 2005 and 2004 ..................................A-56

         Statements of Cash Flows for the years ended December
            31, 2005 and 2004  ......................................... A-57

         Notes to Financial Statements ..................................A-58

(ii) Financial Statement Schedules:

          Schedule II - Valuation and Qualifying Accounts

(iii) Exhibits:

         The following exhibits are filed with this Annual Report or are
incorporated herein by reference:

Exhibit No.       Description

3.01              Restated  Articles of Incorporation of the Company is
                  incorporated herein by reference from the Company's
                  Quarterly Report on Form 10-QSB for the quarter ended
                  June 30, 2004 (SEC File No. 0-49837), Exhibit 3.01.
3.02              Bylaws of the Company is incorporated herein by reference from
                  the Company's Form 10-SB (SEC File No. 0-49837) filed
                  with the SEC on May 28, 2002, Part III, Item 1, Exhibit 3.02.
3.03              Article of Merger of Westside Energy  Subsidiary  Corporation
                  with and into the Company, whereby the Company changed its
                  corporate name to "Westside Energy Corporation" is
                  incorporated herein by reference from the Company's Annual
                  Report on Form 10-KSB for the year ended December 31, 2003
                  (SEC File No. 0-49837), Exhibit 3.04
 4.01             Specimen  Common Stock  Certificate is  incorporated  herein
                  by reference from  Pre-effective  Amendment No. 1 to the
                  Company's Registration Statement on Form SB-2 (SEC File No.
                  333-120659) filed December 23, 2004, Exhibit 4.01.

                                       A-49
<PAGE>

10.01             Warrant to Purchase the Company's common stock issued in the
                  name of Westside Energy,  L.P. is incorporated herein by
                  reference from the Company's  Current Report on Form 8-K (SEC
                  File No.  0-49837) filed with the SEC on March 1, 2004,
                  Exhibit 10.03
10.02             Warrant to Purchase the Company's common stock issued in the
                  name of Keith D.  Spickelmier is incorporated  herein by
                  reference from the Company's  Current Report on Form 8-K (SEC
                  File No.  0-49837) filed with the SEC on March 1, 2004,
                  Exhibit 10.04
10.03             Warrant to Purchase the Company's common stock issued in the
                  name of Westside Resources,  L.P. is incorporated herein
                  by reference  from the Company's  Registration  Statement on
                  Form SB-2 (SEC File No.  333-120659)  filed November 22,
                  2004, Exhibit 10.09.
10.04             Warrant to Purchase the Company's common stock issued in the
                  name of Keith D.  Spickelmier is incorporated  herein by
                  reference from the Company's  Registration  Statement on Form
                  SB-2 (SEC File No. 333-120659) filed November 22, 2004,
                  Exhibit 10.10.
10.05             Form of Warrant to Purchase the  Company's common stock issued
                  to investors in the  Company's  private  placement of units is
                  incorporated  herein by reference from the Company's
                  Registration  Statement on Form SB-2 (SEC File No. 333-120659)
                  filed November 22, 2004, Exhibit 10.11. 10.08 Form of
                  Registration Rights Agreement entered into with investors in
                  the Company's private placement of units is incorporated
                  herein by reference from the Company's Registration  Statement
                  on Form SB-2 (SEC File No. 333-120659) filed November 22,
                  2004, Exhibit 10.12.
10.09             Form of  Subscription  and  Registration  Rights  Agreement
                  entered  into with  investors in the  Company's  private
                  placement of shares of common stock is incorporated herein by
                  reference from the Company's  Registration Statement on
                  Form SB-2 (SEC File No. 333-120659) filed November 22, 2004,
                  Exhibit 10.13.
10.10             Placement  Agent  Engagement  Agreement  by and between the
                  Company and Sterne,  Agee & Leach,  Inc. is  incorporated
                  herein by reference from the Company's Registration  Statement
                  on Form SB-2 (SEC File No. 333-120659) filed November 22,
                  2004, Exhibit 10.14.
10.11             First Amendment to Placement Agent Engagement  Agreement by
                  and between the Company and Sterne, Agee & Leach, Inc. is
                  incorporated  herein by reference from the Company's
                  Registration  Statement on Form SB-2 (SEC File No. 333-120659)
                  filed November 22, 2004, Exhibit 10.15.
10.12             Warrant to Purchase  the  Company's common stock issued in the
                  name of Sterne,  Agee & Leach,  Inc. is  incorporated herein
                  by reference from the Company's  Registration  Statement on
                  Form SB-2 (SEC File No. 333-120659) filed November 22, 2004,
                  Exhibit 10.16.
10.13             Agreement  dated  April 12,  2005  between  the Company  and
                  EBS Oil and Gas  Partners  Production  Company,  L.P. is
                  incorporated  herein by reference from the Company's Current
                  Report on Form 8-K (SEC File No. 0-49837) filed with the
                  SEC on April 22, 2005, Exhibit 10.01
10.14             Agreement dated May 3, 2005 between the Company and Sean J.
                  Austin is incorporated herein by reference from the Company's
                  Current Report on Form 8-K (SEC File No. 0-49837) filed with
                  the SEC on May 19, 2005, Exhibit 10.01

                                       A-50
<PAGE>

10.15             Employment  Agreement  dated  December 8, 2005  between the
                  Company and Douglas G. Manner is  incorporated  herein by
                  reference  from the Company's  Current  Report on Form 8-K
                  (SEC File No.  0-49837)  filed with the SEC on December 8,
                  2005, Exhibit 10.01
23.01             Consent of Malone & Bailey, PC - filed herewith
23.02             Consent of LaRoche Petroleum Consultants, Ltd. -filed herewith
31.1              Sarbanes Oxley Section 302 Certification
32.1              Sarbanes Oxley Section 906 Certification
99.01             The Company's Year 2004 Consultant  Compensation Plan (filed
                  as Exhibit 4.1 to the Company's  Registration  Statement
                  on Form S-8 (SEC File No. 333-114686) filed April 21, 2004.
99.02             The Company's Year 2004 Director Stock Plan (filed as Exhibit
                  4.2 to the Company's Registration Statement on Form
                  S-8 (SEC File No. 333-124890) filed May 13, 2005.

(b) Reports on Form 8-K

                           The Registrant filed a Current Report on Form 8-K on
                  October 21, 2005 reporting that certain of its financial
                  statements should no longer be relied upon because of an error
                  in such financial statements, primarily due to a
                  misclassification of seismic expenditures as capitalized oil
                  and gas properties instead of expensed exploration costs.

                           The Registrant filed a Current Report on Form 8-K on
                  December 5, 2005 reporting on the entry into a purchase and
                  sale agreement regarding the purchase of all of the
                  outstanding equity interests in EBS Oil and Gas Partners
                  Production Company, L.P. and its affiliates.

                           The Registrant filed a Current Report on Form 8-K on
                  December 8, 2005 reporting on the election and employment of
                  Douglas G. Manner as the Company's Chief Operating Officer.

ITEM 14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES.

         Malone & Bailey, PC, Certified Public Accountants, are the Company's
independent auditors to examine the financial statements of the Company for the
fiscal years ended December 31, 2004 and December 31, 2005. Malone & Bailey, PC
has performed the following services and has been paid the following fees for
these fiscal years.

Audit Fees

         Malone & Bailey, PC was paid aggregate fees of approximately $13,745
for the fiscal year ended December 31, 2004 and approximately $51,267 for the
fiscal year ended December 31, 2005 for professional services rendered for the
audit of the Company's annual financial statements and for the reviews of the
financial statements included in Company's quarterly reports on Form 10-QSB
during these fiscal years.

Audit-Related Fees

         Malone & Bailey, PC was not paid any additional fees for the fiscal
year ended December 31, 2004 and December 31, 2005 for assurance and related
services reasonably related to the performance of the audit or review of the
Company's financial statements.


                                       A-51
<PAGE>



Tax Fees

         Malone & Bailey, PC was paid aggregate fees of approximately $2,080 for
the fiscal year ended December 31, 2004 and approximately $3,500 for the fiscal
year ended December 31, 2005 for professional services rendered for tax
compliance, tax advice and tax planning.

Other Fees

         Malone & Bailey, PC was paid no other fees for professional services
during the fiscal years ended December 31, 2004 and December 31, 2005.


                                       A-52
<PAGE>


          REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


To the Board of Directors
   Westside Energy Corporation
   Houston, Texas

         We have audited the accompanying balance sheet of Westside Energy
Corporation as of December 31, 2005, and the related statements of operations,
stockholders' equity, and cash flows for each of the two years then ended. These
financial statements are the responsibility of Westside's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

         We conducted our audits in accordance with standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

         In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Westside Energy
Corporation, as of December 31, 2005, and the results of its operations and its
cash flows for the periods described in conformity with accounting principles
generally accepted in the United States of America.


MALONE & BAILEY, PC
www.malone-bailey.com
Houston, Texas

March 15, 2006





                                       A-53
<PAGE>


                           WESTSIDE ENERGY CORPORATION
                                  BALANCE SHEET
                                December 31, 2005


ASSETS

Current Assets
  Cash                                                             $   604,411
  Certificate of deposit and escrow account                             27,693
  Marketable securities                                              1,050,000
  Accounts receivable                                                  492,349
  Prepaid assets                                                         1,770
  Deferred acquisition charges                                         289,367
                                                                   -----------
Total current assets                                                 2,465,590

Oil & gas properties, using successful efforts accounting
  Proved properties                                                  8,513,598
  Unproved properties                                                4,282,036
  Accumulated depreciation, depletion,
    amortization & impairment                                       (1,293,895)
                                                                   -----------
Net oil & gas properties                                            11,501,739

Loan receivable from EBS                                             4,100,000

Office furniture & equipment, net of
      accumulated depreciation of $53,129                                    -
                                                                   -----------
TOTAL ASSETS                                                      $ 18,067,329
                                                                   ===========
LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities-accounts payable and
  accrued expenses                                                $    529,446
Non-current liabilities-asset
  retirement obligations                                                27,880
                                                                   -----------
TOTAL LIABILITIES                                                      557,326
                                                                   -----------
STOCKHOLDERS' EQUITY
Preferred stock, $.01 par value, 10,000,000 shares
  authorized, none issued and outstanding                                    -
Common stock, $.01 par value, 50,000,000 shares
  authorized, 17,376,745 shares issued and outstanding                 173,767
Additional paid in capital                                          22,913,214
Accumulated deficit                                                 (5,400,666)
Deferred compensation                                                 (176,312)
                                                                   -----------
TOTAL STOCKHOLDERS' EQUITY                                          17,510,003
                                                                   -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                        $ 18,067,329
                                                                   ===========


                       See notes to financial statements.



                                       A-54
<PAGE>



                           WESTSIDE ENERGY CORPORATION
                            STATEMENTS OF OPERATIONS
                     Years Ended December 31, 2005 and 2004



                                                   2005              2004
                                                ----------        ---------
Revenues
  Oil and gas sales                           $   595,657        $  116,137
                                                ---------         ---------
Total Revenues                                    595,657           116,137

Expenses
  Production                                      108,227                 -
  Exploration                                     360,170                 -
  General and administrative                    1,782,184           745,955
  Depreciation, depletion,
    and amortization                              344,797            97,965
  Impairment                                      636,278           268,962
                                               ----------         ---------
Total Expenses                                  3,231,656         1,112,882
                                               ----------         ---------
Loss from Operations                           (2,635,999)         (996,745)

Other Income (Expense)
   Interest income                                359,490            50,704
   Interest expense                                (2,070)         (141,983)
   Other income                                         -            51,265
   Gain (loss) on marketable
     securities                                       (98)                -
   Gain (loss) on sale of oil
     and gas properties                           339,355                 -
                                               ----------         ---------
Total Other Income (Expense)                      696,677           (40,014)
                                               ----------         -----------
     NET LOSS                                $ (1,939,322)      $(1,036,759)
                                              ===========       ===========

Basic and diluted loss
    per common share                           $    (0.11)       $    (0.18)
Weighted average common
    shares outstanding                         17,273,205         5,607,215




                       See notes to financial statements.




                                       A-55
<PAGE>






                           WESTSIDE ENERGY CORPORATION
                  STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                     Years Ended December 31, 2004 and 2005
<TABLE>
<CAPTION>

                                     Common Stock           Additional
                                                Par           Paid In    Accumulated     Deferred
                                   Shares      Value          Capital      Deficit     Compensation    Totals

<S>                                  <C>         <C>           <C>           <C>          <C>           <C>

Balances at December 31,
  2003                            1,157,831   $ 11,578      $ 2,344,411   $(2,424,585)    $      -     $ (68,596)

Imputed Interest                                                  1,220                                    1,220
Discount on notes payable                                       119,051                                  119,051
Stock issued for cash            14,851,000    148,510       19,220,980                               19,369,490
Stock issued for properties         700,000      7,000           13,619                                   20,619
Stock issued for
  fundraising                        10,000        100             (100)                                       -
Stock issued for property
  costs                              30,000        300           43,200                                   43,500
Stock issued for services           149,500      1,495          232,780                                  234,275
Stock issued for debt               150,000      1,500          298,500                                  300,000
Net Loss                                                                   (1,036,759)                (1,036,759)
                                ------------  ---------      -----------  ------------   ---------   -----------
Balances at December 31, 2004    17,048,331    170,483       22,273,661    (3,461,344)           -    18,982,800

Stock issued for warrants
  exercised                         218,000      2,180          222,820                                  225,000
Prior fundraising costs                                          (2,121)                                  (2,121)
Stock issued for services            33,972        340          128,138                                  128,478
Deferred compensation                76,442        764          290,716                   (291,480)            -
Amortization of deferred
  Compensation                                                                             115,168       115,168
Net loss                                                                   (1,939,322)                (1,939,322)
                                ------------  --------       -----------   -----------   ---------   -----------
Balances at December 31, 2005    17,376,745  $ 173,767     $ 22,913,214   $(5,400,666)   $(176,312)  $17,510,003
                                ============  ========       ===========   ===========   =========   ===========

</TABLE>




                       See notes to financial statements.




                                       A-56
<PAGE>


                          WESTSIDE ENERGY CORPORATION
                            STATEMENTS OF CASH FLOWS
                 Twelve Months Ended December 31, 2005 and 2004

                                                     2005             2004
                                                   ----------      ---------
CASH FLOWS FROM OPERATING ACTIVITIES
  Net loss                                       $(1,939,322)     $(1,036,759)
  Adjustments to reconcile net loss to net
    cash used in operating activities:
    Stock-based compensation                         243,646          234,275
    Impairment                                       636,278          268,962
    Depreciation, depletion and amortization         344,797           97,965
    Gain on sale of properties                      (339,355)               -
    Loss on marketable securities                         98                -
    Imputed interest                                       -            1,220
    Amortization of discount on note payable               -          119,051
    Changes in:
      Accounts receivable                           (377,414)        (114,934)
      Prepaid assets and other                        28,505          (30,468)
      Deferred acquisition charges                  (289,367)               -
      Accounts payable and accrued expenses          111,924           79,939
                                                  ----------       ----------
NET CASH USED IN OPERATING ACTIVITIES             (1,580,210)        (380,749)
                                                  ----------       ----------
CASH FLOWS FROM INVESTING ACTIVITIES
  Purchase of marketable securities               (3,575,000)               -
  Proceeds from sale of marketable securities      2,524,902                -
  Purchase of certificate of deposit
    and escrow account                               (27,500)               -
  Purchase of office equipment                       (27,220)         (25,909)
  Loan Receivable - EBS                           (4,100,000)               -
  Capital expenditures for oil and gas
    properties                                    (9,277,131)      (3,249,809)
  Proceeds from sale of properties                   448,000                -
                                                  ----------       ----------
NET CASH USED IN INVESTING ACTIVITIES            (14,033,949)      (3,275,718)
                                                  ----------       ----------
CASH FLOWS FROM FINANCING ACTIVITIES
  Proceeds from notes issued to
    related parties                                        -          810,000
  Proceeds from notes payable                              -          300,000
  Payments on advances from shareholder                    -          (17,720)
  Payments on notes to related parties                     -         (810,000)
  Payments for fundraising                            (2,121)               -
  Proceeds from sale of common stock                 225,000       19,369,490
                                                  ----------       ----------
NET CASH PROVIDED BY FINANCING ACTIVITIES            222,879       19,651,770
                                                  ----------       ----------
NET CHANGE IN CASH                               (15,391,280)      15,995,303

CASH BALANCES
  Beginning of period                             15,995,691              388
                                                  ----------       ----------
  End of period                                  $   604,411      $15,995,691
                                                  ==========       ==========

SUPPLEMENTAL DISCLOSURES:
  Cash paid for interest                         $         -      $         -
  Cash paid for income taxes                               -                -

NON-CASH TRANSACTIONS:
  Stock issued for oil and gas interests         $         -      $    64,119
  Debt converted to common stock                           -          300,000
  Asset retirement obligation incurred                20,370            6,646
  Discount on note payable                                 -          119,051
  Stock issued for deferred compensation             291,480                -
  Accrual for oil and gas property purchases         286,318                -


                       See notes to financial statements.

                                       A-57
<PAGE>




                           WESTSIDE ENERGY CORPORATION
                          NOTES TO FINANCIAL STATEMENTS

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of operations and organization

Westside Energy Corporation ("Westside") (formerly EvenTemp Corporation) was
incorporated in Nevada on November 30, 1995. EvenTemp operated an auto repairand
accessory business. This business ceased operating in August 1999. The name of
the company was changed to Westside Energy Corporation in March 2004.

Westside is engaged primarily in the acquisition, exploration, development,
production, and sales of, oil, gas and natural gas liquids. Westside sells its
oil and gas products primarily to domestic natural gas pipelines and crude oil
marketers.

Use of estimates

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

Revenue recognition

Westside records oil and gas revenues following the entitlement method of
accounting for production, in which any excess amount received above Westside's
share is treated as a liability. If less than Westside's share is received, the
underproduction is recorded as an asset. Westside did not have an imbalance
position in terms of volumes or values at December 31, 2005.

Oil and gas properties

Westside uses the successful efforts method of accounting for oil and gas
producing activities. Costs to acquire mineral interests in oil and gas
properties, to drill and equip exploratory wells that find proved reserves, to
drill and equip development wells and related asset retirement costs are
capitalized. Costs to drill exploratory wells that do not find proved reserves,
geological and geophysical costs, and costs of carrying and retaining unproved
properties are expensed.

Unproved oil and gas properties that are individually significant are
periodically assessed for impairment of value, and a loss is recognized at the
time of the impairment by providing an impairment allowance. Capitalized costs
of producing oil and gas properties, after considering estimated residual
salvage values, are depreciated and depleted by the unit-of-production method.
Support equipment and other property and equipment are depreciated over their
estimated useful lives.



                                       A-58
<PAGE>


On the sale or retirement of a complete unit of proved property, the cost and
related accumulated depreciation, depletion, and amortization are eliminated
from the property accounts, and the resultant gain or loss is recognized. On the
retirement or sale of a partial unit of proved property, the cost is charged to
accumulated depreciation, depletion, and amortization with a resulting gain or
loss recognized in income.

On the sale of an entire interest in an unproved property for cash or cash
equivalent, gain or loss on the sale is recognized, taking into consideration
the amount of any recorded impairment if the property had been assessed
individually. If a partial interest in an unproved property is sold, the amount
received is treated as a reduction of the cost of the interest retained.

At December 31, 2005, Westside had four producing wells. Oil and gas revenues
received by Westside were from two operators.

Seismic costs

Management considers 3-D seismic surveys over acreage with proved reserves
assigned to be development activities. For development projects, the Company
uses its 3-D seismic database to select drill sites, assess recompletion
opportunities and production issues, quantify reservoir size and determine
probable extensions and/or drainage areas for existing fields. Westside
amortizes the cost of its capitalized developmental 3-D seismic survey costs
using the unit-of-production method. Costs for 3-D seismic surveys over unproven
acreage are defined as related to exploration activities and are expensed in the
period incurred.

Cash and cash equivalents

Cash and cash equivalents include cash in banks and certificates of deposit
which mature within three months of the date of purchase.

Other property and equipment

Property and equipment are valued at cost. Additions are capitalized and
maintenance and repairs are charged to expense as incurred. Gains and losses on
dispositions of equipment are reflected in other income and expense. As of
December 31, 2005, all other property and equipment has been fully depreciated.

Long-lived assets

Long-lived assets to be held and used or disposed of other than by sale are
reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount may not be recoverable. When required, impairment
losses on assets to be held and used or disposed of other than by sale are
recognized based on the fair value of the asset. Long-lived assets to be
disposed of by sale are reported at the lower of the asset's carrying amount or
fair value less cost to sell.

Stock-based compensation

In 2005, Westside began issuing common stock to employees as compensation.
Westside records as compensation expense the fair value of such shares as
calculated pursuant to Statement of Financial Accounting Standard No. 123,
Accounting for Stock-Based Compensation ("SFAS No. 123"), recognized over the
related service period. Westside has no option plans for its employees. Westside
accounts for stock-based compensation issued to non-employees in accordance with
the provisions




                                       A-59
<PAGE>




of SFAS No. 123 and EITF No. 96-18, "Accounting for Equity Instruments That Are
Issued to Non-Employees for Acquiring, or in Conjunction with Selling Goods or
Services". For expensing purposes, the value of common stock issued to
non-employees and consultants is determined based on the fair value of the
services received or the fair value of the equity instruments issued, whichever
value is more reliably measurable.

Income taxes

Westside recognizes deferred tax assets and liabilities based on differences
between the financial reporting and tax basis of assets and liabilities using
the enacted tax rates and laws that are expected to be in effect when the
differences are expected to be recovered. Westside provides a valuation
allowance for deferred tax assets for which it does not consider realization of
such assets to be more likely than not.

Loss per share

Basic and diluted net loss per share calculations are calculated on the basis of
he weighted average number of common shares outstanding during the year. The per
share amounts include the dilutive effect of common stock equivalents in years
with net income. Westside had losses in 2005 and 2004. Basic and diluted loss
per share is the same due to the absence of common stock equivalents.

New accounting standards

In December 2004, the FASB issued SFAS No. 123R, "Share-Based Compensation."
SFAS No. 123R establishes standards for accounting for transactions in which an
entity exchanges its equity instruments for goods or services. This Statement
focuses primarily on accounting for transactions in which an entity obtains
employee services in share-based payment transactions. SFAS No. 123R requires
that the fair value of such equity instruments be recognized as expense in the
historical financial statements as services are performed. Prior to SFAS No.
123R, only certain pro forma disclosures of fair value were required. SFAS No.
123R shall be effective for Westside as of the beginning of 2006. The adoption
of this new accounting pronouncement is not currently expected to have a
material impact on Westside's financial statements.

Westside does not expect the adoption of any other recently issued accounting
pronouncements to have a significant impact on its results of operations,
financial position or cash flows.

NOTE 2 - MARKETABLE SECURITIES

As of December 31, 2005, Westside's marketable securities consist of corporate
bonds. The marketable securities are deemed by management to be
"available-for-sale" and, accordingly, are reported at fair value, with
unrealized gains and losses reported in other comprehensive income and reflected
as a separate component

within stockholders' equity. Realized gains and losses on securities
available-for-sale are included in other income/expense and, when applicable,
are reported as a reclassification adjustment, net of tax, in other
comprehensive income. Gains and losses on the sale of available-for-sale
securities are determined using the specific-identification method. These
marketable securities have a fair value of $1,050,000 at December 31, 2005.

                                       A-60
<PAGE>





<PAGE>




NOTE 3 - LOANS TO EBS PRODUCTION

During 2005, Westside entered into an agreement with EBS Oil and Gas Partners
Production Company, L.P. ("EBS Production"), a privately held entity engaged in
the drilling and completion of wells on various oil and gas leases covering
lands located in Cooke, Montague, and Wise Counties, Texas. Under the terms of
the agreement, Westside will make available to EBS Production, on a revolving
basis, funds of up to a maximum sum of $1,000,000 outstanding at any given time.
The funds will be advanced to cover the costs incurred by EBS Production in
connection with its acquisition of oil and gas leases. Westside will have the
discretion as to whether or not to make any advances with respect to any
particular leases presented by EBS Production for financing pursuant to the
agreement.

During November 2005, Westside purchased from a group of private investors their
rights as lenders in certain outstanding debt owed by EBS to such group. The
outstanding balance of, and the purchase price paid by Westside for, the debt
was $3.85 million. The debt is secured by subordinate liens on and security
interests in substantially all of EBS Production's assets. The debt accrues
interest at the rate of 12% per annum and will become due and payable in
approximately five years.

During December 2005, Westside made an additional loan to EBS for $250,000. The
documentation governing the purchased debt was amended to cover this additional
loaned amount as if it was part of the original purchased debt. Accordingly, the
additional loaned amount accrues interest, is secured, and matures in the same
manner as the original purchased debt.

As of December 31, 2005, Westside had a total $4,100,000 due from EBS
Production. In March 2006, Westside completed the acquisition of EBS (see Note
11).

NOTE 4 - ASSET RETIREMENT OBLIGATIONS

Westside recognizes the fair value of an asset retirement obligation in the
period in which it is incurred if a reasonable estimate of fair value can be
made. The present value of the estimated asset retirement costs is capitalized
as part of the carrying amount of the long-lived asset. For Westside, asset
retirement obligations relate to the abandonment of oil and gas producing
facilities. The amounts recognized are based upon numerous estimates and
assumptions, including future retirement costs, future recoverable quantities of
oil and gas, future inflation rates and the credit-adjusted risk-free interest
rate.

Westside records depreciation of the capitalized asset retirement cost and
accretion of the asset retirement obligation over time. The depreciation will
generally be determined on a straight line basis, while the accretion to be
recognized will escalate over the life of the producing assets, typically as
production declines. The following table indicates the changes to Westside's
asset retirement obligations in 2005:


Balance at December 31, 2004                                   $   6,646
Liabilities incurred                                              20,370
Accretion expense                                                    864
                                                               ---------
Balance at December 31, 2005                                    $ 27,880
                                                               =========





                                       A-61
<PAGE>




NOTE 5 - CONCENTRATION OF CREDIT RISK

At December 31, 2005, Westside's cash in financial institutions exceeded the
federally insured deposits limit by $504,411. An investment of $326,804 in a
bank account, backed by collateralized mortgage obligations, is included in cash
and cash equivalents at December 31, 2005. The collateral for this investment
had a market value of approximately $335,431 at December 31, 2005.


NOTE 6 - COMMITMENTS AND CONTINGENCIES

Westside is not currently involved in any pending legal proceedings. In the
future, Westside may become involved in various legal proceedings from time to
time, either as a plaintiff or as a defendant, and either in or outside the
normal course of business. Westside is not now in the position to determine when
(if ever) such a legal proceeding may arise. If Westside ever becomes involved
in a legal proceeding, Westside's financial condition, operations, or cash flows
could be materially adversely affected, depending on the facts and circumstances
relating to such proceeding.

In March 2005, Westside entered into a 38-month office lease agreement, with the
first two months free, for $3,660 per month.

Westside entered into a credit agreement with EBS Oil and Gas Production Co.,
L.P., EBS Oil and Gas Partners Production GP, LLC, and EBS Oil and Gas Partners
Operating Co., L.P. to loan up to $5,850,000. As of December 31, 2005, Westside
has loaned the above mentioned entities $4,100,000.

Westside is subject to cash calls related to its various investments in oil and
gas prospects. The potential cash calls are in the normal course of business for
Westside's oil and gas interests. Westside will require funds in excess of its
net cash flows from operations to meet its cash calls for its various interests
in oil and gas prospects to explore, produce, develop, and eventually sell the
underlying natural gas and oil products.

In February 2006, Westside agreed to lease a rig at a contract rate of $17,400
per day for six months. The agreement includes an option to extend for an
additional six months under the same terms.

NOTE 7 - INCOME TAXES

The tax effects of temporary differences that give rise to significant portions
of the deferred tax assets and deferred tax liabilities at December 31, 2005 are
as follows:

Net operating loss                            $ 2,971,000
Less: Valuation allowance                      (2,971,000)
                                               -----------
  Total                                       $         -
                                               ===========

Westside has prior net operating loss carryforwards of approximately $8,740,000
as of December 31, 2005. These carryforwards expire in 2020 through 2025.


                                       A-62
<PAGE>


NOTE 8 - IMPAIRMENT OF LONG-LIVED ASSETS

Pursuant to FASB Statement No. 144, Accounting for the Impairment or Disposal of
Long-Lived Assets, impairment losses of $636,278 and $268,962 for 2005 and 2004,
respectively, have been recognized in loss from continuing operations before
income taxes under the caption "Impairment". The impairment loss was determined
by subtracting the carrying value from the discounted present value of the
estimated future cash flows of the wells as of the end of each year.

NOTE 9 - COMMON STOCK

During 2005, 218,000 warrants were exercised for total proceeds of $225,000.
Westside also issued 110,414 shares of common stock for services valued at
$419,958. Of that amount, 76,442 shares valued at $291,480 were classified as
deferred compensation and are expensed as earned. As of December 31, 2005,
$115,168 of the $291,480 had been expensed.

During 2004, Westside had the following equity transactions:

o        Westside sold an aggregate of 4,080,000 shares of common stock to one
         of its directors and to an entity under the control of its other
         director for $.01 per share for total proceeds of $40,800.

o        Westside sold 385,500 units consisting of two shares of common stock
         and one warrant to purchase common stock with a per share exercise
         price of $2.50, for cash of $2.00 per unit for total proceeds of
         $771,000.

o        Westside issued 149,500 shares of common stock for services valued at
         $234,275. Westside issued 30,000 shares of common stock valued at
         $43,500 for costs related to purchasing the Oil and Gas Properties.

o        Westside completed an equity offering consisting of 10,000,000 shares
         of common stock with an offer price of $2.00 per share. The cash
         offering resulted $20,000,000 in gross proceeds. Westside's placement
         agent received $1,400,000 and 300,000 warrants with a purchase price of
         $2.00 per share and a term of 5 years.

o        A $300,000 note was converted at $2 per share in November 2004
         resulting in the issuance of 150,000 shares.

NOTE 10 - WARRANTS

During 2005, no additional warrants were issued. During 2004, Westside issued
warrants attached to debt, stock purchases, and for consulting services. All
issuances were approved by the board of directors.

There were no warrants issued or outstanding until the year ended December 31,
2004. A summary of changes in outstanding warrants is as follows:




                                       A-63
<PAGE>



                                                               Weighted
                                                               Average
                                             Warrants         Share Price
                                            ----------        ------------
Outstanding at December 31, 2003                     -                   -

Changes during the year:
  Granted                                    1,510,500               $1.31
  Exercised                                          -                   -
  Forfeited                                          -                   -
                                            ----------        ------------
Outstanding at December 31, 2004             1,510,500                1.31

Changes during the year:
  Granted                                            -                   -
  Exercised                                   (218,000)               1.03
  Forfeited                                          -                   -
                                            ----------        ------------
Outstanding at December 31, 2005             1,292,500               $1.36
                                            ==========        ============

Warrants outstanding and exercisable as of December 31, 2005:

                                             Outstanding          Exercisable
                                          Number     Remaining       Number
               Exercise Price          of Warrants      Life       of Shares
               --------------         ------------    ---------   -----------
                  $  .50                   660,000    3.2 years      660,000
                    2.00                   300,000    3.8 years      300,000
                    2.50                   332,500     .4 years      332,500

Westside has determined, based upon a Black-Scholes model, that the fair value
of the warrants on the date of grant was approximately $1,848,000, using an
expected life of two to five years, volatility of 131% and a risk-free interest
rate of 2.0%.

The differences in the exercise prices of the various warrants are due to the
issue timing of the warrants as follows:

                                    Exercise                           Market
      Description                  Dates Issued           Price        Price

In connection with notes payable   February - April 2004  $0.50  $0.001 to $1.45
Private equity transactions        May - June 2004        $2.50   $1.25 to $3.18
Private placement memorandum       November 2004          $2.00            $3.75

The warrants issued in connection with the notes payable were recorded as a
discount on the notes payable based on the relative fair value. Most of these
warrants were issued on February 26, 2004 when there had been no trading
activity in the common stock for several months and the market price was $0.001.

The November 2004 warrants were issued on the same date and priced at the same
per share amount as the shares issued in the private placement.





                                       A-64
<PAGE>




NOTE 11 - SUBSEQUENT EVENTS

On January 9, 2006, Westside completed the private placement of 3,278,000 shares
of its common stock at a price of $3.15 per share. The cash offering resulted in
$10,325,700 in gross proceeds and approximately $9.5 million in net proceeds to
the Company after deducting placement-related costs of $825,700.

During January and February 2006, Westside made additional loans to EBS totaling
$1,750,000. The documentation governing the Purchased Partnership Debt was
amended to cover these additional loaned amounts as if they were part of the
original Purchased Partnership Debt. Accordingly, the additional loaned amount
accrues interest, is secured, and matures in the same manner as the original
Purchased Partnership Debt.

On March 15, 2006, Westside acquired EBS Oil and Gas Partners Production
Company, L.P. and EBS Oil and Gas Partners Operating Company, L.P. (collectively
"EBS"). The acquired EBS assets consist (in part) of rights in approximately
9,837 gross acres. In addition, EBS owns an approximately one-sixth interest in
Tri-County Gathering, a pipeline system (operated by Cimmarron Gathering, LLP)
that is the primary transporter of gas sold by EBS in the Barnett Shale area.
This pipeline is comprised of approximately 14 miles of gathering lines and
three compression stations with approximately 2,500 horsepower of compression
with pipeline capacity of approximately 20 million cubic feet per day.

The purchase price for the Equity Interests consisted of an initial purchase
price paid at closing (the "Initial Purchase Price") and additional
consideration to be paid after closing (the "Additional Consideration"). The
Initial Purchase Price was set at $9,804,839, subject to certain adjustments.
The adjustments included a reduction in the Initial Purchase Price for all debt
owed by EBS, including (a) indebtedness in the approximate amount of $5,850,000
owed by EBS to Westside, and (b) indebtedness in the approximate amount of
$1,600,000 owed by EBS to a third party paid off on March 2006 in connection
with the closing of the EBS transaction. After making adjustments, Westside paid
in cash at the closing approximately $151,000 to the Class B partners of EBS and
an EBS payable in the amount of approximately $294,000, and Westside received a
credit in the approximate amount of $1,700,000 against the future payment of the
Additional Consideration discussed below. Funding for the cash paid at the
closing and the retirement of the Third Party Loan was provided from Westside's
available cash and by GasRock Capital LLC ("GasRock") pursuant to an Advancing
Term Credit Agreement (the "Credit Agreement"). Funding for the cash portion of
the Additional Consideration will be provided by GasRock pursuant to the Credit
Agreement.

The amount of Additional Consideration will be based on certain EBS wells (the
"CVR Wells") that were in various stages of development as of the date of the
Acquisition Agreement but that did not have production sustained for a
sufficient period of time to permit a third party engineering report to
establish proved reserves. The amount of Additional Consideration will depend
upon the amount of "Proved Reserves" (as such term is used in the definitions
promulgated by the Society of Petroleum Evaluation Engineers and the World
Petroleum Congress) that the CVR Wells are determined to have after the closing
of the Transaction. The determination of the amount of the Additional
Consideration will take place on several occasions after the closing of the
Transaction.





                                       A-65
<PAGE>





On March 15, 2006, Westside, as borrower, entered into a $45 million four-year
Advancing Term Credit Agreement (the "Credit Agreement") with GasRock Capital
LLC ("GasRock"), as lender. The Credit Agreement provides the terms under which
GasRock will make available to Westside a senior secured revolving credit
facility in an aggregate amount of up to $45 million. Borrowings under the
Credit Agreement may be used for the following purposes:

         1.       Up to $9.5 million may be used for closing costs pertaining to
                  the transaction, for approved drilling and for pipeline
                  expansion.

         2.       Up to $7.5 million may be used for the cash portion of the
                  Additional Consideration that may become due with respect to
                  the CVR Wells, as discussed in "Item 2.01 Completion of
                  Acquisition or Disposition of Assets" above, provided that any
                  amount advanced for payment of the Additional Consideration
                  will reduce dollar-for-dollar the amount available for the
                  uses described in purpose 4 below.

         3.       Up to $1.5 million may be used in certain circumstances, for
                  the Company's overhead.

         4.       Up to an additional $34.0 million may be made available at
                  later dates (subject to GasRock's approval) for additional
                  exploitation of proved developed non-producing reserves,
                  additional lender-approved drilling of new wells, lease
                  acquisitions, pipeline expansion or seismic expenses.

In connection with the consummation of the transaction, Westside borrowed $5.3
million under the Credit Agreement for the payment of the cash at closing, the
retirement of the Third Party Loan, the reimbursement of costs associated with
previous drilling, and future developmental drilling.

GasRock's commitments under the Credit Agreement will terminate on March 14,
2009, unless terminated earlier by Westside upon repayment of all outstanding
amounts or by GasRock upon an event of default. To secure Westside's obligations
under the Credit Agreement, Westside granted a security interest in all of its
assets in favor of GasRock. The Credit Agreement also requires hedging for a
substantial portion of Westside's reserves. Amounts outstanding under the Credit
Agreement will bear interest at an annual rate equal to the greater of (a)
twelve percent (12.0%) or (b) the one-month London interbank offered rate
(LIBOR), plus 6.50%. Eighty-five percent (85.0%) of monthly revenue from oil &
gas production and commodity hedging, net of production operations related
costs, will be applied to the repayment of the indebtedness under the Credit
Agreement, subject to the limited ability of Westside to remit less than 85% and
to retain more than 15% of monthly net revenue to cover Westside's overhead.
Westside will also pay a facility fee equal to 2.0% of all advances, with the
amount of such fee not paid at the time of the advance but added to the
outstanding principal balance and amortized in accordance with the terms of the
Credit Agreement. In consideration of GasRock providing the financing under the
Credit Agreement, GasRock will receive a one percent (1.0%) overriding royalty
interest in each producing well and lease within Westside as of the date of the
execution of the Credit Agreement. GasRock will also receive a one percent
(1.0%) overriding royalty interest in each producing well and lease and related
unit (as defined in the Credit Agreement) acquired during the term of the Credit
Agreement if Westside uses advances under the Credit Agreement to acquire same.
GasRock will




                                       A-66
<PAGE>




also receive a one and one-half percent (1.5%) overriding royalty interest in
each existing producing well and related unit (as defined in the Credit
Agreement) plus future producing wells and related units developed using
advances under the Credit Agreement. The Credit Agreement contains customary
representations and warranties, customary affirmative and negative covenants
(including a maximum leverage ratio), and customary events of default.

NOTE 13 -- SUPPLEMENTAL OIL AND GAS INFORMATION (UNAUDITED)

Capitalized Costs

Capitalized costs incurred in property acquisition, exploration, and development
activities as of December 31, 2005 are as follows:

Total Capitalized                                           $ 12,795,634
Less: Accumulated depletion                                   (1,293,895)
                                                              ----------
Net Capitalized                                             $ 11,501,739
                                                              ==========

Costs incurred for property acquisition, exploration, and development activities
for the year ended December 31, 2005 are as follows:

Acquisition of properties
  Proved                                                     $         -
  Unproved                                                     3,058,121
Exploration costs                                                360,170
Development costs                                              6,505,328
                                                              ----------
Total costs incurred for property acquisition,
  exploration, and development activities                    $ 9,923,619
                                                              ==========

Results of operations for oil and gas producing activities for the year ended
December 31, 2005 are as follows:

Oil & gas sales                                              $   595,657
Gain on sale of oil and gas properties                           339,355
Production costs                                                (108,227)
Exploration expenses                                            (360,170)
Depreciations, depletion and amortization                       (344,797)
Impairment                                                      (636,278)
                                                              ----------
                                    (514,460)
Income tax expense                                                     -
                                                              ----------
Results of operations for oil and gas producing
  activities (excluding corporate overhead
  and financing costs)                                        $ (514,460)
                                                              ==========

Reserve information

The following estimates of proved and proved developed reserve quantities and
related standardized measure of discounted net cash flow are estimates only, and
do not purport to reflect realizable values or fair market values of the
Company's



                                       A-67
<PAGE>




reserves. The Company emphasizes that reserve estimates are inherently imprecise
and that estimates of new discoveries are more imprecise than those of producing
oil and gas properties. Accordingly, these estimates are expected to change as
future information becomes available. All of the Company's reserves are located
in the United States.

Proved reserves are estimated reserves of crude oil (including condensate and
natural gas liquids) and natural gas that geological and engineering data
demonstrate with reasonable certainty to be recoverable in future years from
known reservoirs under existing economic and operating conditions. Proved
developed reserves are those expected to be recovered through existing wells,
equipment, and operating methods.

The standardized measure of discounted future net cash flows is computed by
applying year-end prices of oil and gas (with consideration of price changes
only to the extent provided by contractual arrangements) to the estimated future
production of proved oil and gas reserves, less estimated future expenditures
(based on year-end costs) to be incurred in developing and producing the proved
reserves, less estimated future income tax expenses (based on year-end statutory
tax rates, with consideration of future tax rates already legislated) to be
incurred on pretax net cash flows less tax basis of the properties and available
credits, and assuming continuation of existing economic conditions. The
estimated future net cash flows are then discounted using a rate of 10 percent a
year to reflect the estimated timing of the future cash flows.


                                                   2005               2004
                                               Oil       Gas      Oil      Gas
                                             (MBbls) (MMcf) (MBbls) (MMcf)
                                             -------   ------   ------    ------
Proved developed reserves
     Beginning of year                       1.679     90.789        -        -
     Revisions of previous estimates         0.182     43.585        -        -
     Purchases of minerals in place         84.185  1,120.091    2.333  104.594
     Production                             (0.840)   (62.766)  (0.654) (13.805)
                                             -------   ------   ------   ------
     End of the year                        85.206  1,191.699    1.679   90.789
                                             -------   ------   ------   ------

Standardized Measure of Discounted Future
  Net Cash Flows at December 31, 2005                                   (000's)
                                                                         ------
    Future cash inflows                                                 $17,950
    Future production costs                                              (4,447)
    Future development costs                                               (717)
    Future income tax expenses, at 34%                                   (4,347)
                                                                         ------
          Future gross cash flows                                         8,439

Less:  10% annual discount for
           estimated timing of cash flows                                (2,035)
                                                                         ------
  Standardized measures of discounted future net cash flows
    relating to proved oil and gas reserves                             $ 6,404
                                                                         ======



                                       A-68
<PAGE>




The following reconciles the change in the standardized measure of discounted
future net cash flow during 2005.

                                                                        (000's)
                                                                         ------
Beginning of year                                                        $  294
  Sales of oil and gas produced, net of production costs                   (487)
  Net changes in prices and production costs                              3,692
  Purchases of minerals                                                   9,564
  Net changes in estimated future development costs                        (717)
  Revisions of previous quantity estimates                                  377
  Change in discount                                                     (2,093)
  Future income tax expense                                              (4,226)
                                                                         ------
End of year                                                              $6,404
                                                                         ======




                                       A-69
<PAGE>


                                   SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Westside Energy Corporation has duly caused this annual
report on Form 10-KSB/A to be signed on its behalf by the undersigned, thereunto
duly authorized.

June 22, 2006                       WESTSIDE ENERGY CORPORATION

                                    By: /s/ Jimmy D. Wright
                                        Jimmy D. Wright,
                                        President





                                       A-70




<PAGE>


                                   SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Westside Energy Corporation has duly caused this annual
report on Form 10-KSB/A to be signed on its behalf by the undersigned, thereunto
duly authorized.

June 22, 2006                            WESTSIDE ENERGY CORPORATION

                                            By: /s/ Jimmy D. Wright
                                            Jimmy D. Wright,
                                            President