SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                  FORM 10-KSB/A
(Mark One)

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

For the Fiscal Year Ended January 31, 2007
                                       OR
(   )   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
    EXCHANGE ACT OF 1934

Commission File No. 0-33259

                             ENERGAS RESOURCES, INC.
                             -----------------------
                 (Name of Small Business Issuer in its charter)

                Delaware                               73-1620724
         ------------------------              ---------------------------
         (State of incorporation)           (IRS Employer Identification No.)

      800 Northeast 63rd Street
       Oklahoma City, Oklahoma                                   73105
   ---------------------------------------               --------------------
   (Address of Principal Executive Office)                     Zip Code

Registrant's telephone number, including Area Code: (405)-879-1752
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:

                                  Common Stock
                                ---------------
                                (Title of Class)

Check if the Company is not required to file  reports  pursuant to Section 13 or
15(d) of the Exchange Act [ ]

Check whether the Company (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 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.

                                      X
                                    ------      ------
                                     YES          NO

Check if disclosure  of delinquent  filers in response to Item 405 of Regulation
S-B is not contained in this form, and no disclosure  will be contained,  to the
best  of  the  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.  [X]

The Company's revenues during the year ended January 31, 2007 were $644,360.

Indicate by check mark whether the Company is a shell company (as defined in
Rule 12b-25 of the Exchange Act):
                                     Yes [ ]       No [X]

The aggregate market value of the voting stock held by non-affiliates of the
Company, (50,310,940 shares) based upon the closing price of the Company's
common stock on June 1, 2007 was approximately $1,509,328.

As of June 1, 2007 the Company had 78,673,814 outstanding shares of common
stock.

Documents incorporated by reference:      None




                                       1
<PAGE>


            CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING NFORMATION

     This report includes  "forward-looking  statements".  All statements  other
than  statements  of  historical  facts  included in this report,  regarding the
Company's  financial  position,  reserve  quantities  and  net  present  values,
business strategy,  plans and objectives of management of the Company for future
operations and capital expenditures,  are forward-looking  statements.  Although
the Company  believes  that the  expectations  reflected in the  forward-looking
statements and the assumptions  upon which such  forward-looking  statements are
based  are  reasonable,  it can give no  assurance  that such  expectations  and
assumptions  will prove to have been  correct.  Reserve  estimates are generally
different  from the  quantities  of oil and  natural  gas  that  are  ultimately
recovered.



                                       2
<PAGE>

                                    GLOSSARY

      The following terms are used throughout this report:

      BBL. One stock tank barrel, or 42 U.S. gallons liquid volume, usually used
herein in reference to crude oil or other liquid hydrocarbons.

      BOE. Equivalent barrels of oil, using the ratio of six Mcf of natural gas
to one Bbl of crude oil, condensate or natural gas liquids.

      BTU. A British thermal unit which is the amount of heat required to raise
the temperature of one avoirdupois pound of pure water form 58.5 degrees to 59.5
degrees Fahrenheit under standard conditions.

      DEVELOPED ACREAGE. The number of acres which are allocated or assignable
to producing wells or wells capable of production.

      DEVELOPMENT WELL. A well drilled as an additional well to the same
reservoir as other producing wells on a Lease, or drilled on an offset Lease not
more than one location away from a well producing from the same reservoir.

      EXPLORATORY WELL. A well drilled in search of a new undiscovered pool of
oil or gas, or to extend the known limits of a field under development.

      GROSS ACRES OR WELLS. A well or acre in which a working interest is owned.
The number of gross wells is the total number of wells in which a working
interest is owned.

      LEASE. Full or partial interests in an oil and gas lease, authorizing the
owner thereof to drill for, reduce to possession and produce oil and gas upon
payment of rentals, bonuses and/or royalties. Oil and gas leases are generally
acquired from private landowners and federal and state governments. The term of
an oil and gas lease typically ranges from three to ten years and requires
annual lease rental payments of $1.00 to $2.00 per acre. If a producing oil or
gas well is drilled on the lease prior to the expiration of the lease, the lease
will generally remain in effect until the oil or gas production from the well
ends. The Company is required to pay the owner of the leased property a royalty
which is usually between 12.5% and 16.6% of the gross amount received from the
sale of the oil or gas produced from the well.

      MCF. One thousand cubic feet.

      NET ACRES OR WELLS. A net well or acre is deemed to exist when the sum of
fractional ownership working interests in gross wells or acres equals one. The
number of net wells or acres is the sum of the fractional working interests
owned in gross wells or acres expressed as whole numbers and fractions.


                                       3
<PAGE>

      OPERATING COSTS. The expenses of producing oil or gas from a formation,
consisting of the costs incurred to operate and maintain wells and related
equipment and facilities, including labor costs, repair and maintenance,
supplies, insurance, production, severance and other production excise taxes.

      PRODUCING PROPERTY. A property (or interest therein) producing oil or gas
in commercial quantities or that is shut-in but capable of producing oil or gas
in commercial quantities, to which Producing Reserves have been assigned.
Interests in a property may include Working Interests, production payments,
Royalty Interests and other non-working interests.

      PRODUCING RESERVES. Proved Developed Reserves expected to be produced from
existing completion intervals open for production in existing wells.

      PROSPECT. An area in which a party owns or intends to acquire one or more
oil and gas interests, which is geographically defined on the basis of
geological data and which is reasonably anticipated to contain at least one
reservoir of oil, gas or other hydrocarbons.

      PROVED DEVELOPED RESERVES. Proved developed oil and gas reserves are
reserves that can be expected to be recovered through existing wells with
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 may be included as "proved developed reserves" only after testing by a
pilot project or after the operation of an installed program has confirmed
through production response that increased recovery will be achieved.

      PROVED RESERVES. Proved oil and gas reserves are the estimated quantities
of crude oil, natural gas, and natural gas liquids which geological and
engineering data demonstrate with reasonable certainty to be recoverable in
future years from known reservoirs under existing economic and operating
conditions, i.e., prices and costs as of the date the estimate is made. Prices
include consideration of changes in existing prices provided only by contractual
arrangements, but not on escalations based upon future conditions.

      (i) Reservoirs are considered proved if economic producibility is
supported by either actual production or conclusive formation testing. The area
of a reservoir considered proved includes (a) that portion delineated by
drilling and defined by gas-oil and/or oil-water contacts, if any; and (b) the
immediately adjoining portions not yet drilled, but which can be reasonably
judged as economically productive on the basis of available geological and
engineering data. In the absence of information on fluid contacts, the lowest
known structural occurrence of hydrocarbons controls the lower proved limit of
the reservoir.

      (ii) Reserves which can be produced economically through application of
improved recovery techniques (such as fluid injection) are included in the
"proved" classification when successful testing by a pilot project, or the
operation of an installed program in the reservoir, provides support for the
engineering analysis on which the project or program was based.


                                       4
<PAGE>

      (iii) Estimates of proved reserves do not include the following: (a) oil
that may become available from known reservoirs but is classified separately as
"indicated additional reserves", (b) crude oil, natural gas, and natural gas
liquids, the recovery of which is subject to reasonable doubt because of
uncertainty as to geology, reservoir characteristics, or economic factors; (c)
crude oil, natural gas, and natural gas liquids, that may occur in undrilled
prospects; and (d) crude oil, natural gas, and natural gas liquids, that may be
recovered from oil shales, coal, gilsonite and other such sources.

        PROVED UNDEVELOPED RESERVES. Proved undeveloped oil and gas reserves are
reserves that are expected to be recovered from new wells on undrilled acreage,
or from existing wells where a relatively major expenditure is required for
recompletion. Reserves on undrilled acreage are limited to those drilling units
offsetting productive units that are reasonably certain of production when
drilled. Proved reserves for other undrilled units can be claimed only where it
can be demonstrated with certainty that there is continuity of production from
the existing productive formation. Proved undeveloped reserves are not
attributable to any acreage for which an application of fluid injection or other
improved recovery technique is contemplated, unless such techniques have been
proved effective by actual tests in the area and in the same reservoir.

         ROYALTY INTEREST. An interest in an oil and gas property entitling the
owner to a share of oil and gas production free of Operating Costs.

         UNDEVELOPED ACREAGE. Lease acres 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 or not such acreage contains
proved reserves. Undeveloped acreage should not be confused with undrilled
acreage which is "Held by Production" under the terms of a lease.

         WORKING INTEREST. The operating interest under a Lease which gives the
owner the right to drill, produce and conduct operating activities on the
property and a share of production, subject to all Royalty Interests and other
burdens and to all costs of exploration, development and operations and all
risks in connection therewith.

ITEM 1. DESCRIPTION OF BUSINESS
-------------------------------

     The Company was incorporated under the laws of British Columbia,  Canada on
November  2, 1989 and on August 20,  2001 the Company  became  domesticated  and
incorporated in Delaware.

     The Company is involved in the  exploration and development of oil and gas.
The  Company's  activities  are primarily  dependent  upon  available  financial
resources to fund the costs of drilling and completing wells.

     The Company evaluates undeveloped oil and gas prospects and participates in
drilling  activities on those  prospects  which in the opinion of management are
favorable  for  the  production  of  oil or  gas.  If,  through  its  review,  a
geographical  area  indicates  geological  and economic  potential,  the Company
attempts  to  acquire  Leases  or other  interests  in the area and  assemble  a


                                       5
<PAGE>

Prospect.  The Company  normally sells portions of its leasehold  interests in a
Prospect to  unrelated  third  parties,  thus  sharing  risks and rewards of the
exploration and development of the Prospect with the joint owners pursuant to an
operating agreement. One or more Exploratory Wells may be drilled on a Prospect,
and if the results  indicate the presence of  sufficient  oil and gas  reserves,
additional  Development  Wells  may be  drilled  on the  Prospect.  The  Company
typically  seeks  potential  joint  venture  partners  for  development  of  its
Prospects.

     The Company's  corporate  offices are located at 800 Northeast 63rd Street,
Third Floor,  Oklahoma City,  Oklahoma  73105 and its telephone  number is (405)
879-1752. The Company's web site is www.energasresources.com.

PRINCIPAL AREAS OF OPERATION

     The Company  principally  operates  in the Arkoma  Basin in  Oklahoma,  the
Powder River Basin in Wyoming and the Appalachian Basin of Eastern Kentucky.

     As of April 30, 2007 the Company had 4 gas wells in the Arkoma  Basin which
were producing approximately 422 Mcf of gas per day.

      The Company's oil and gas production in the Powder River Basin are
attributable to two wells in Rusty Creek Prospect in Niobrara County, Wyoming.
The Company does not intend to drill any additional wells on this prospect. As
of April 30, 2007, the Company's two wells in the Rusty Creek Prospect produced
approximately 9 barrels of crude oil per day.

      In August 2003 the Company acquired 31 producing wells with a gathering
system, compressor stations, plus developed and undeveloped acreage. All of the
acquired properties are located in the Appalachian Basin of eastern Kentucky.
The Kentucky properties were acquired from three private corporations for
$3,000,000 in convertible notes. In March 2004 the Company paid $100,000, plus
interest, on one of the notes and holders of notes with a remaining principal
amount of $2,400,000 converted their notes into 4,800,000 shares of the
Company's common stock. The remaining note bore interest at 8.5% per and was due
in August 2023. On August 25, 2005 the Company issued 1,250,000 shares of its
common stock in full payment of the remaining note which had a principal balance
on that date of $479,218.

      Since August 2003 the Company has completed an additional 39 wells in
eastern Kentucky. In addition, the Company has acquired more leases in others
areas of eastern Kentucky that contain multiple wells. As of April 30, 2007 the
Company's wells in Kentucky were producing approximately 310 Mcf of gas per day
and 6 barrels of oil per day.

      In January 2007 the Company signed an agreement to sell a majority of its
Kentucky properties to an unrelated third party for approximately $1,700,000.
The closing of the sale is expected to take place prior to June 30, 2007.


                                       6
<PAGE>


DRILLING ACTIVITIES AND PROVEN RESERVES

      During the periods indicated, the Company drilled or participated in the
drilling of the following wells:
<TABLE>
<S>                     <C>       <C>   <C>      <C>    <C>      <C>     <C>     <C>

                                          Year Ended January 31,
                       -------------------------------------------------------------
                             2004            2005            2006           2007
                             ----            ----            ----           ----
                       Gross      Net   Gross     Net   Gross     Net   Gross    Net
                       -----      ---   -----     ---   -----     ---   -----    ---
Exploratory Wells (1):
  Productive:
   Oil                    --       --      --      --      --      --      --     --
   Gas                     1     .875       1    .137      --      --      --     --
   Nonproductive           1        1      --      --       1     .24      --     --

Development Wells (1):
  Productive:
   Oil                    --       --       1    .137       1    .137      --     --
   Gas                     6     5.25      27   9.625       3   2.625      --     --
  Nonproductive           --       --      --      --       1    .137      --     --

Total Wells (1):
  Productive:
   Oil                    --      --        1    .137       1    .137      --     --
   Gas                     7   6.125       28   9.762       3   2.625      --     --
  Nonproductive            1       1       --      --       2    .377      --     --

</TABLE>

(1)  Each well completed to more than one producing zone is counted as a single
     well. The Company has royalty interests in certain wells that are not
     included in this table.

      In May 2003 the Company arranged with a private investor to fund the
drilling of two natural gas wells in the Arkoma Basin of eastern Oklahoma. The
two wells were drilled in June 2003 and one well was successfully completed as a
gas well and the other well was a dryhole. The Company will receive
approximately 5% of the production from the productive well, after payment of
the Company's share of operating expenses, until the investor is repaid the
amounts advanced to drill and complete the wells, which were approximately
$490,000. After the amount advanced by the investor has been repaid, the Company
will receive approximately 25% of the production from the well after payment of
the Company's share of operating expenses

      The following table shows, as of May 31, 2007, by state and basin, the
Company's producing wells, Developed Acreage, and Undeveloped Acreage, excluding
service (injection and disposal) wells:




                                       7
<PAGE>

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

                 Productive Wells (1)    Developed Acreage   Undeveloped Acreage (2)
                 Gross         Net       Gross         Net     Gross          Net
                 -----         ---       -----         ---     -----          ---

   Oklahoma          4         1.5       1,920         998        --           --
   Wyoming           2         .71          80          29     1,680          599
   Kentucky         74        63.7       1,660       1,441    13,642       11,937
                    --      ------       -----       -----    ------       ------
       Totals       80       65.91       3,660       2,468    15,322       12,536
                    ==       =====       =====       =====    ======       ======

</TABLE>

(1)  The wells in Oklahoma  and  Kentucky are gas wells and the wells in Wyoming
     are oil wells.

(2)  "Undeveloped  Acreage" includes leasehold interests on which wells have not
     been drilled or completed to the point that would permit the  production of
     commercial  quantities  of natural  gas and oil  regardless  of whether the
     leasehold interest is classified as containing proved undeveloped reserves.

      The following table shows, as of May 31, 2007 the status of Company's
gross acreage.

                              Held by Production     Not Held by Production
                              ------------------     ----------------------

      Oklahoma                       1,920                      --
      Wyoming                          640                   1,120
      Kentucky                      11,660                   3,642

      If the Company completes the sale of its Kenutucky properties, the
Company's producing wells, Developed Acreage, Undeveloped Acreage, and Gross
Acreage in Kentucky would be shown below:

            Productive Wells    Developed Acreage    Undeveloped Acreage
            ----------------    -----------------    -------------------
            Gross        Net    Gross         Net    Gross           Net
            -----        ---    -----         ---    -----           ---

              6          4.7     240          204    3,062          2,684


                                        Gross Acreage
                        ----------------------------------------------
                        Held by Production      Not Held by Production
                        ------------------      ----------------------

                               1,680                     1,622

      Acres Held By Production remain in force so long as oil or gas is produced
from the well on the particular lease. Leased acres which are not Held By
Production require annual rental payments to maintain the lease until the first
to occur of the following: the expiration of the lease or the time oil or gas is
produced from one or more wells drilled on the lease acreage. At the time oil or
gas is produced from wells drilled on the leased acreage the lease is considered
to be Held By Production.

      The Company does not own any Overriding Royalty Interests.


                                       8
<PAGE>

      Title to properties is subject to royalty, overriding royalty, carried,
net profits, working and other similar interests and contractual arrangements
customary in the oil and gas industry, to liens for current taxes not yet due
and to other encumbrances. As is customary in the industry in the case of
undeveloped properties, little investigation of record title is made at the time
of acquisition (other than a preliminary review of local records). Drilling
title opinions are always prepared before commencement of drilling operations;
however, as is customary in the industry.

      The following table sets forth the Company's net production of oil and
gas, average sales prices and average production costs during the periods
presented:

                                   Year Ended January 31,
                                -----------------------------
Production Data:                2005        2006         2007
                                ----        ----         ----
   Production -
      Oil (Bbls)                4,008       2,962        1,417
      Gas (Mcf)               106,276     130,748       97,836
   Average sales price -
      Oil (Bbls)            $   39.06   $   50.16    $   47.67
      Gas (Mcf)             $    5.33   $    7.96    $    6.04
   Average production
       costs per MCF        $    2.49   $    3.49    $    4.23

      Production costs may vary substantially among wells depending on the
methods of recovery employed and other factors, but generally include severance
taxes, administrative overhead, maintenance and repair, labor and utilities.

      The Company is not obligated to provide a fixed and determined quantity of
oil or gas in the future. During the last three fiscal years, the Company has
not had, nor does it now have, any long-term supply or similar agreement with
any government or governmental authority.

      Below are estimates of the Company's net Proved Reserves and the present
value of estimated future net revenues from such Reserves based upon the
standardized measure of discounted future net cash flows relating to proved oil
and gas reserves in accordance with the provisions of Statement of Financial
Accounting Standards No. 69, "Disclosures about Oil and Gas Producing
Activities" (SFAS No. 69). The standardized measure of discounted future net
cash flows is determined by using estimated quantities of Proved Reserves and
the periods in which they are expected to be developed and produced based on
period-end economic conditions. The estimated future production is priced at
period-end prices, except where fixed and determinable price escalations are
provided by contract. The resulting estimated future cash inflows are then
reduced by estimated future costs to develop and produce reserves based on
period-end cost levels. No deduction has been made for depletion, depreciation
or for indirect costs, such as general corporate overhead. Present values were
computed by discounting future net revenues by 10% per year.



                                       9
<PAGE>

                                               January 31,
                        -------------------------------------------------------
                              2005               2006               2007
                        ---------------     ---------------    ---------------
                         Oil        Gas     Oil      Gas       Oil        Gas
                        (Bbls)     (Mcf)   (Bbls)    (Mcf)    (Bbls)     (Mcf)
                        ------     -----   ------    -----    ------     -----

Proved reserves         30,398  2,181,471  41,180  1,764,909  22,143  1,942,040
Estimated future net
 cash flows from
 proved oil and
 gas reserves               $7,164,199        $8,227,331          $7,383,384

Present value of future net
  cash flows from proved
  oil and gas reserves      $4,337,635        $4,992,059          $4,416,660

      The Company's Proved Reserves include only those amounts which the Company
reasonably expects to recover in the future from known oil and gas reservoirs
under existing economic and operating conditions, at current prices and costs,
under existing regulatory practices and with existing technology. Accordingly,
any changes in prices, operating and development costs, regulations, technology
or other factors could significantly increase or decrease estimates of Proved
Reserves.

      In general, the volume of production from natural gas and oil properties
owned by the Company declines as reserves are depleted. Except to the extent the
Company acquires additional properties containing proved reserves or conducts
successful exploration and development activities, or both, the proved reserves
of the Company will decline as reserves are produced. Volumes generated from
future activities of the Company are therefore highly dependent upon the level
of success in acquiring or finding additional reserves and the costs incurred in
doing so.

      If the Company completes the sale of its Kentucky properties, the present
value of its estimated future net cash flows from proved oil and gas reserves,
as of January 31, 2007, would be approximately $3,900,000.

GOVERNMENT REGULATION

      Various state and federal agencies regulate the production and sale of oil
and natural gas. All states in which the Company plans to operate impose
restrictions on the drilling, production, transportation and sale of oil and
natural gas.

      Under the Natural Gas Act of 1938, the Federal Energy Regulatory
Commission (the "FERC") regulates the interstate transportation and the sale in
interstate commerce for resale of natural gas. The FERC's jurisdiction over
interstate natural gas sales has been substantially modified by the Natural Gas
Policy Act under which the FERC continued to regulate the maximum selling prices
of certain categories of gas sold in "first sales" in interstate and intrastate
commerce.


                                       10
<PAGE>

      The Natural Gas Wellhead Decontrol Act (the "Decontrol Act") deregulated
natural gas prices for all "first sales" of natural gas. Because "first sales"
include typical wellhead sales by producers, all natural gas produced from
natural gas properties is sold at market prices, subject to the terms of any
private contracts which may be in effect. The FERC's jurisdiction over natural
gas transportation is not affected by the Decontrol Act.

      The Company's sales of natural gas will be affected by intrastate and
interstate gas transportation regulations which are designed to foster
competition by, among other things, transforming the role of interstate pipeline
companies from wholesale marketers of natural gas to the primary role of gas
transporters. All natural gas marketing by the pipelines is required to divest
to a marketing affiliate, which operates separately from the transporter and in
direct competition with all other merchants. Pipelines must provide open and
nondiscriminatory transportation and transportation-related services to all
producers, natural gas marketing companies, local distribution companies,
industrial end users and other customers seeking service.

      FERC has pursued other policy initiatives that have affected natural gas
marketing. Most notable are (1) the large-scale divestiture of interstate
pipeline-owned gas gathering facilities to affiliated or non-affiliated
companies; (2) further development of rules governing the relationship of the
pipelines with their marketing affiliates; (3) the publication of standards
relating to the use of electronic bulletin boards and electronic data exchange
by the pipelines to make available transportation information on a timely basis
and to enable transactions to occur on a purely electronic basis; (4) further
review of the role of the secondary market for released pipeline capacity and
its relationship to open access service in the primary market; and (5)
development of policy and promulgation of orders pertaining to its authorization
of market-based rates (rather than traditional cost-of-service based rates) for
transportation or transportation-related services upon the pipeline's
demonstration of lack of market control in the relevant service market. The
Company does not know what effect the FERC's other activities will have on the
access to markets, the fostering of competition and the cost of doing business.

      As a result of these changes, sellers and buyers of natural gas have
gained direct access to the particular pipeline services they need and are
better able to conduct business with a larger number of counter parties. The
Company believes these changes generally have improved the access to markets for
natural gas while, at the same time, substantially increasing competition in the
natural gas marketplace. The Company cannot predict what new or different
regulations the FERC and other regulatory agencies may adopt or what effect
subsequent regulations may have on production and marketing of natural gas from
the Company's properties.

      In the past, Congress has been very active in the area of natural gas
regulation. However, as discussed above, the more recent trend has been in favor
of deregulation and the promotion of competition in the natural gas industry.
Thus, in addition to "first sales" deregulation, Congress also repealed
incremental pricing requirements and natural gas use restraints previously
applicable. There are other legislative proposals pending in the Federal and
State legislatures which, if enacted, would significantly affect the petroleum
industry. At the present time, it is impossible to predict what proposals, if
any, might actually be enacted by Congress or the various state legislatures and


                                       11
<PAGE>

what effect, if any, these proposals might have on the production and marketing
of natural gas by the Company. Similarly, and despite the trend toward federal
deregulation of the natural gas industry, whether or to what extent that trend
will continue or what the ultimate effect will be on the production and
marketing of natural gas by the Company cannot be predicted.

      The Company's sales of oil and natural gas liquids will not be regulated
and will be at market prices. The price received from the sale of these products
will be affected by the cost of transporting the products to market. Much of
that transportation is through interstate common carrier pipelines. FERC
regulates interstate transportation rates and adjusts these rates annually based
on the rate of inflation, subject to certain conditions and limitations. Every
five years, the FERC examines the relationship between the annual change in the
applicable index and the actual cost changes experienced by the oil pipeline
industry. The Company is not able to predict with certainty what effect, if any,
these federal regulations or the periodic review of the index by the FERC will
have.

      Federal, state, and local agencies have promulgated extensive rules and
regulations applicable to the Company's oil and natural gas exploration,
production and related operations. Most states require permits for drilling
operations, drilling bonds and the filing of reports concerning operations and
impose other requirements relating to the exploration of oil and natural gas.
Many states also have statutes or regulations addressing conservation matters
including provisions for the unitization or pooling of oil and natural gas
properties, the establishment of maximum rates of production from oil and
natural gas wells and the regulation of spacing, plugging and abandonment of
such wells. The statutes and regulations of some states limit the rate at which
oil and natural gas is produced from the Company's properties. The federal and
state regulatory burden on the oil and natural gas industry increases the
Company's cost of doing business and affects its profitability. Because these
rules and regulations are amended or reinterpreted frequently, the Company is
unable to predict the future cost or impact of complying with those laws.

COMPETITION AND MARKETING

      The Company will be faced with strong competition from many other
companies and individuals engaged in the oil and gas business, many are very
large, well established energy companies with substantial capabilities and
established earnings records. The Company may be at a competitive disadvantage
in acquiring oil and gas prospects since it must compete with these individuals
and companies, many of which have greater financial resources and larger
technical staffs. It is nearly impossible to estimate the number of competitors;
however, it is known that there are a large number of companies and individuals
in the oil and gas business.

      Exploration for and production of oil and gas are affected by the
availability of pipe, casing and other tubular goods and certain other oil field
equipment including drilling rigs and tools. The Company depends upon
independent drilling contractors to furnish rigs, equipment and tools to drill
its wells. Higher prices for oil and gas may result in competition among
operators for drilling equipment, tubular goods and drilling crews which may


                                       12
<PAGE>

affect the Company's ability expeditiously to drill, complete, recomplete and
work-over its wells. However, the Company has not experienced and does not
anticipate difficulty in obtaining supplies, materials, drilling rigs, equipment
or tools.

      The Company does not refine or otherwise process crude oil and condensate
production. Substantially all of the crude oil and condensate production from
the Company's well is sold at posted prices under short-term contracts, which is
customary in the industry.

      The market for oil and gas is dependent upon a number of factors beyond
the Company's control, which at times cannot be accurately predicted. These
factors include the proximity of wells to, and the capacity of, natural gas
pipelines, the extent of competitive domestic production and imports of oil and
gas, the availability of other sources of energy, fluctuations in seasonal
supply and demand, and governmental regulation. In addition, there is always the
possibility that new legislation may be enacted which would impose price
controls or additional excise taxes upon crude oil or natural gas, or both.
Oversupplies of natural gas can be expected to recur from time to time and may
result in the gas producing wells being shut-in. Increased imports of natural
gas, primarily from Canada, have occurred and are expected to continue. Such
imports may adversely affect the market for domestic natural gas.

      The market price for crude oil is significantly affected by policies
adopted by the member nations of Organization of Petroleum Exporting Countries
("OPEC"). Members of OPEC establish prices and production quotas among
themselves for petroleum products from time to time with the intent of
controlling the current global supply and consequently price levels. The Company
is unable to predict the effect, if any, that OPEC or other countries will have
on the amount of, or the prices received for, crude oil and natural gas produced
and sold from the Company's wells.

      Gas prices, which were once effectively determined by government
regulations, are now largely influenced by competition. Competitors in this
market include producers, gas pipelines and their affiliated marketing
companies, independent marketers, and providers of alternate energy supplies,
such as residual fuel oil. Changes in government regulations relating to the
production, transportation and marketing of natural gas have also resulted in
significant changes in the historical marketing patterns of the industry.
Generally, these changes have resulted in the abandonment by many pipelines of
long-term contracts for the purchase of natural gas, the development by gas
producers of their own marketing programs to take advantage of new regulations
requiring pipelines to transport gas for regulated fees, and an increasing
tendency to rely on short-term contracts priced at spot market prices.

GENERAL

      The Company has never been a party to any bankruptcy, receivership,
reorganization, readjustment or similar proceedings. Since the Company is
engaged in the oil and gas business, it does not allocate funds to product
research and development in the conventional sense. The Company does not have
any patents, trade-marks, or labor contracts. With the exception of the
Company's oil and gas leases, the Company does not have any licenses,
franchises, concessions or royalty agreements. Backlog is not material to an


                                       13
<PAGE>

understanding of the Company's business. The Company's business is not subject
to renegotiation of profits or termination of contracts or subcontracts at the
election of federal government.

         As of April 30, 2007, the Company employed 10 people. The Company's
employees work in management, engineering, geology, land and legal and
accounting. In addition, 5 contract workers were responsible for the supervision
and operation of the Company's field activities and providing well services.

ITEM 2.  DESCRIPTION OF PROPERTY
--------------------------------

      See Item 1 of this report for information concerning the Company's oil and
gas properties.

      The Company's offices are located at 800 Northeast 63rd Street, Oklahoma
City, Oklahoma and consist of 4,800 square feet which is rented on a
month-to-month basis for $3,800 per month. The building is owned by George G.
Shaw, the Company's Chief Executive Officer and a Director.

ITEM 3.  LEGAL PROCEEDINGS.
--------------------------
         None

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

         Not Applicable

ITEM 5.  MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
----------------------------------------------------------------------------
         OTHER SHAREHOLDER MATTERS.
         --------------------------

      The Company's common stock is listed on the OTC Bulletin Board under the
symbol EGSR. The following table shows the high and low sale prices of the
Company's common stock during the periods presented as reported by the NASD. The
closing sale prices reflect inter-dealer prices without adjustment for retail
markups, markdowns or commissions and may not reflect actual transactions.

                                             Closing Sale Price
                                                 Common Stock
            Quarter Ended                    High            Low
            -------------                    ----            ---

            April 30, 2004                   $0.52          $0.21
            July 31, 2004                    $0.60          $0.36
            October 31, 2004                 $0.80          $0.48
            January 31, 2005                 $0.77          $0.42



                                       14
<PAGE>

            April 30, 2005                   $0.32          $0.30
            July 31, 2005                    $0.28          $0.27
            October 31, 2005                 $0.40          $0.38
            January 31, 2006                 $0.57          $0.54

            April 30, 2006                   $0.44          $0.40
            July 31, 2006                    $0.14          $0.13
            October 31, 2006                 $0.08          $0.07
            January 31, 2007                 $0.04          $0.03

      As of May 31, 2007 there were were approximately 1,400 holders of the
Company's common stock.

      The market price of the Company's common stock is subject to significant
fluctuations in response to, and may be adversely affected by (i) variations in
quarterly operating results, (ii) developments in the oil and gas industry
generally and more particularly within the geographically and geological areas
that the Company owns and operates properties, and (iii) general stock market
conditions.

      The Company's common stock is subject to the "penny stock" rules. The
penny stock trading rules impose additional duties and responsibilities upon
broker-dealers and salespersons recommending the purchase or sale of a penny
stock. Required compliance with these rules will materially limit or restrict
the ability to resell the Company's common stock, and the liquidity typically
associated with other publicly traded stocks may not exist.

      During the year ended January 31, 2007 neither the Company, any officer or
director of the Company, nor any principal shareholder purchased any shares of
the Company's common stock either from the Company, from third parties in a
private transaction, or as a result of purchases in the open market.

Other Shares Which May Be Issued

      As of May 31, 2007 the Company had 78,673,814 outstanding shares of common
stock.

      The following table lists additional shares of the Company's common stock
which may be issued as the result of the exercise of outstanding options and
warrants:

                                                        Number of      Note
                                                          Shares     Reference
                                                        ---------    ---------

   Shares issuable upon exercise of warrants:             714,286         A

   Shares issuable pursuant to Equity Line of Credit      Unknown         B


                                       15
<PAGE>

A. In September 2005 the Company sold 714,286 shares of common stock and 714,286
warrants to one private investor for $200,000. Each warrant entitles the holder
to purchase one share of the Company's common stock at a price of $0.50 per
share. The warrants expire on September 30, 2007. As of April 30, 2007 none of
the warrants had been exercised.

B. On September 20, 2004, the Company entered into an equity line of credit
agreement with Dutchess Private Equities Fund II, L.P. in order to provide a
source of funding for the Company. The equity line of credit agreement
establishes what is sometimes also referred to as an equity drawdown facility.
The number of shares of common stock which will ultimately be issued under the
equity line of credit agreement between the Company and Dutchess Private
Equities is unknown.

      Under the equity line of credit agreement, Dutchess Private Equities has
agreed to provide the Company with up to $10,000,000 of funding during a
thirty-six month period beginning September 24, 2004. During this period, the
Company may request a drawdown under the equity line of credit by selling shares
of its common stock to Dutchess Private Equities and Dutchess Private Equities
will be obligated to purchase the shares. The Company is under no obligation to
request any drawdowns under the equity line of credit.

      The Company may request a drawdown by sending a drawdown notice to
Dutchess Private Equities, stating the amount of the drawdown.

    The amount that the Company can request in any drawdown notice is, at its
election, either:

     o    up to 200% of the average daily volume of the  Company's  common stock
          for the ten  trading  days  prior to the date of the  drawdown  notice
          multiplied  by the average of the three  daily  closing bid prices for
          the  Company's  common  stock  immediately  preceding  the date of the
          drawdown notice; or

     o    $50,000;

provided  that the Company may not request  more than  $1,000,000  in any single
drawdown.

      On the day of the drawdown notice, a pricing period of five trading days
will begin. At the end of the pricing period Dutchess Private Equities will
purchase from the Company that number of share determined by dividing the lesser
of:

     o    the amount in the drawdown notice, or

     o    an amount  equal to 20% of the total  number of the  Company's  shares
          traded during the pricing period  multiplied by the lowest closing bid
          price of the Company's common stock during the pricing period

by ninety-five percent (95%) of the lowest closing bid price of the Company's
common stock during the pricing period.


                                       16
<PAGE>

      However, if any closing bid price of the Company's common stock during the
pricing period is less than ninety percent (90%) of the average closing bid
price of the Company's common stock during the ten trading days prior to the
date of the drawdown notice, the Company may elect, by sending written notice to
Dutchess Private Equities, to withdraw the drawdown, in which case no shares
will be sold during the pricing period.

      The Company may request drawdowns every seven trading days but only if the
shares sold during the prior pricing period have been paid for and issued.

      As of January 31, 2007 the Company had received net proceeds of $1,027,339
from the sale of 1,847,508 shares of common stock under the equity line of
credit. However, before Energas can request any additional drawdowns Energas
must file a new registration statement with the Securities and Exchange
Commission so that additional shares are available for sale to Dutchess Private
Equities under the equity line of credit.

      The shares referred to in Notes A and B are being, or will be, offered for
public sale by means of separate registration statements which have been filed
with the Securities and Exchange Commission.

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
--------------------------------------------------------------------------------
         OF OPERATION
         ------------

      The following discussion of financial condition and results of operations
should be read in conjunction with the consolidated financial statements and the
notes to the consolidated financial statements, which are included elsewhere in
this report.

RESULTS OF OPERATIONS

         The factors that most significantly affect the Company's results of
operations are (i) the sale prices of crude oil and natural gas, (ii) the amount
of production sales, (iii) the amount of lease operating expenses, and (iv) the
level of interest rates on, and amount of, borrowings. Sales of production and
level of borrowings are significantly impacted by the Company's ability to
maintain or increase its production from existing oil and gas properties through
its exploration and development activities. The following table reflects the
average prices received by the Company for oil and gas, the average production
cost per BOE, and the amount of oil and gas produced for the periods presented:

                                    Year Ended January 31,
                                ------------------------------
Production Data:                2005        2006         2007
                                ----        ----         ----
   Production -
      Oil (Bbls)                4,008       2,962         1,417
      Gas (Mcf)               106,276     130,748        97,836
   Average sales price -
      Oil (Bbls)             $  39.06    $  50.16      $  47.67
      Gas (Mcf)              $   5.33    $   7.96      $   6.04
   Average production
       costs per MCF         $   2.49    $   3.49      $   4.23


                                       17
<PAGE>

      Prices received by the Company for sales of crude oil and natural gas have
fluctuated significantly from period to period. The fluctuations in oil prices
during these periods reflect market uncertainty regarding the inability of the
Organization of Petroleum Exporting Countries ("OPEC") to control the production
of its member countries, as well as concerns related to the global supply and
demand for crude oil. Gas prices received by the Company fluctuate with changes
in the spot market price for gas.

      Changes in natural gas and crude oil prices will significantly affect the
revenues and cash flow of the wells and the value of the oil and gas properties.
Declines in the prices of crude oil and natural gas could have a material
adverse effect on the success of the Company's operations and activities,
recoupment of the costs of acquiring, developing and producing the wells and
profitability. The Company is unable to predict whether the prices of crude oil
and natural gas will rise, stabilize or decline in the future.

    In January 2007 the Company entered into an agreement with an unrelated
third party for the sale of all its Pulaski County, Kentucky properties,
gathering systems and equipment for $1,735,000. As of January 31, 2007 the
Company had received cash payments of $557,000 from the third party of which
$200,000 was for the sale of certain royalty rights held by the Company and
$357,000 represented a deposit on the sale of the remainder of properties,
gathering systems, and equipment. The sale of the royalties was completed on
January 25, 2007 and the sale was treated as a reduction in the carrying amount
of the oil and gas properties in accordance with the full cost method of
accounting for oil and gas properties. The remainder of the sale is expected to
close by June 30, 2007 and the $357,000 received has been recorded as a deposit
as of January 31, 2007.

      Other than the foregoing, the Company does not know of any trends, events
or uncertainties that have had or are reasonably expected to have a material
impact on the Company's net sales, revenues or expenses.

YEAR ENDED JANUARY 31, 2007

    Material changes of certain items in the Company's Statement of Operations
for the year ended January 31, 2007, as compared to the year ended January 31,
2006, are discussed below:

                        Increase (I)
Item                   or Decrease (D) Reason
----                   --------------- ------

Oil and Gas Sales              D       Decrease in gas and oil prices and
                                       production
Lease Operating Expenses       D       Reduction in production offset by higher
                                       repair and maintenance expenses
Pipeline and Gathering
 Expense                       D       Reduced production
General and Adiminstrative     D       Reduction in number of employees and
                                       professional fees
Property Impairment            D       As of January 31, 2006 the Company's
                                       investment in its proved developed oil
                                       and gas properties exceeded the present
                                       value of the future net cash flows from
                                       these properties by $520,048. Under


                                       18
<PAGE>

                                       generally accepted accounting principles,
                                       the net carrying value of proved natureal
                                       gas and oil properties cannot eceed the
                                       discounted future net cash flows from
                                       these properties. Accordingly, $520,048
                                       was recorded as additional depreceiation
                                       and amortization during fiscal 2006. As
                                       of January 31, 2007 the Company's
                                       investment in its proved developed oil
                                       and gas  properties  also exceeded the
                                       present value of the future net cash
                                       flows from these properties, but the
                                       difference  was  not as large as in the
                                       previous year.
Interest Expense              I        Increase in interest bearing liabilities
                                       and amortization of loan discount

YEAR ENDED JANUARY 31, 2006

      Material changes of certain items in the Company's Statement of Operations
for the year ended January 31, 2006, as compared to the year ended January 31,
2005, are discussed below:

                        Increase (I)
Item                   or Decrease (D) Reason
----                   --------------- ------

Oil and Gas Sales             I        Increase in gas and oil prices.

Lease Operating Expense       I        Increase in production  and  operating
                                       costs for gas gathering system

Depreciation, Depletion       I        As of January  31,  2006  the  Company's
   and Amortization                    investment in its proved developed  oil
                                       and gas properties exceeded the present
                                       value of the future net cash flows from
                                       these properties by approximately
                                       $520,048. Under generally accepted
                                       accounting principles, the net carrying
                                       value of proved natural gas and oil
                                       properties cannot exceed the discounted
                                       future net cash flows from these
                                       properties. Accordingly, $520,048 was
                                       recorded as additional depreciation and
                                       amortization during the year.

Interest Expense              D        Conversion of debt into common stock.

OIL AND GAS PRICE FLUCTUATIONS

      Fluctuations in crude oil and natural gas prices have significantly
affected the Company's operations and the value of its assets. As a result of
the instability and volatility of crude oil and natural gas prices and at times
the market conditions within the oil and gas industry, financial institutions


                                       19
<PAGE>

are selective in the energy lending area and have reduced the percentage of
existing reserves that may qualify for the borrowing base to support energy
loans.

      The Company's principal source of cash flow is the production and sale of
its crude oil and natural gas reserves which are depleting assets. Cash flow
from oil and gas production sales depends upon the quantity of production and
the price obtained for such production. An increase in prices permits the
Company to finance its operations to a greater extent with internally generated
funds, may allow the Company to obtain equity financing more easily or on better
terms, and lessens the difficulty of attracting financing from industry partners
and non-industry investors. However, price increases heighten the competition
for Leases and Prospects, increase the costs of exploration and development
activities, and, because of potential price declines, increase the risks
associated with the purchase of Producing Properties during times that prices
are at higher levels.

      A decline in oil and gas prices (i) reduces the cash flow internally
generated by the Company which in turn reduces the funds available for servicing
debt and exploring for and replacing oil and gas reserves, (ii) increases the
difficulty of obtaining equity and debt financing and worsens the terms on which
such financing may be obtained, (iii) reduces the number of Leases and Prospects
which have reasonable economic terms, (iv) may cause the Company to permit
Leases to expire based upon the value of potential oil and gas reserves in
relation to the costs of exploration, (v) results in marginally productive oil
and gas wells being abandoned as non-commercial, and (vi) increases the
difficulty of attracting financing from industry partners and non-industry
investors. However, price declines reduce the competition for Leases and
Prospects and correspondingly reduce the prices paid for Leases and Prospects.
Furthermore, exploration and production costs generally decline, although the
decline may not be at the same rate as that of oil and gas prices.

      The Company's results of operations are somewhat seasonal due to seasonal
fluctuations in the sales prices for natural gas. Although in recent years crude
oil prices have been generally higher in the third and fourth fiscal quarters,
these fluctuations are not believed to be seasonal. Natural gas prices have been
generally higher in the fourth fiscal quarter.

CAPITAL RESOURCES AND LIQUIDITY

    The Company's material sources and (uses) of cash during the year ended
January 31, 2007 were:

      Cash used in operations                               $   (146,940)
      Development of oil and gas properties                     (219,167)
      Sale of oil and gas properties in Kentucky and Kansas      400,000
      Purchase of equipment                                     (124,293)
      Loans from related parties                                 214,288
      Sale of common stock                                       132,313
      Loan from Dutchess Private Equities                        500,000
      Repayment of debt                                         (156,688)
      Settlement payments to former joint venture partner       (650,000)
      Cash on hand at February 1, 2006                            50,487


                                       20
<PAGE>

     The Company's material sources and (uses) of cash during the year ended
January 31, 2006 were:

      Cash used in operations                              $   (  74,719)
      Borrowing from related parties                             205,682
      Sale of common stock                                     2,169,773
      Repayment of notes                                         (10,647)
      Loan proceeds                                            1,269,087
      Sale of oil and gas properties                              28,535
      Purchase of equipment and oil and gas properties        (3,195,628)

      As a result of the Company's continued losses and lack of cash there is
substantial doubt as to the Company's ability to continue operations. The
Company plans to generate profits by drilling productive oil or gas wells.
However, the Company will need to raise the funds required to drill new wells
from third parties willing to pay the Company's share of drilling and completing
the wells. The Company may also attempt to raise needed capital through the
private sale of its securities or by borrowing from third parties. The Company
may not be successful in raising the capital needed to drill oil or gas wells.
In addition, any future wells which may be drilled by the Company may not be
productive of oil or gas. The inability of the Company to generate profits may
force the Company to curtail or cease operations.

      In August 2003 the Company acquired 31 producing gas wells, a pipeline,
compressor stations and approximately 23,000 leased and 8,500 optioned acres
from three private corporations for $3,000,000 in convertible notes. In March
2004 the Company paid $100,000, plus interest, on one of the notes and holders
of notes in the principal amount of $2,400,000 converted their notes into
4,800,000 shares of the Company's common stock. The remaining note bore interest
at 8.5% per year and was due in August 2023. On August 25, 2005 the Company
issued 1,250,000 shares of its common stock in full payment of the remaining
note which had a principal balance on that date of $479,218.

      Between January 1, 2004 and June 30, 2004 the Company sold 5,000,000
shares of common stock and 5,000,000 warrants to private investors for
$1,500,000. Each warrant entitled the holder to purchase one share of the
Company's common stock at a price of $0.50 per share. As of January 31, 2006
warrants to purchase 3,506,000 shares had been exercised and the remaining
warrants had expired.

     In September 2004 Energas  entered into an equity line of credit  agreement
with  Dutchess  Private  Equities.  Under the equity  line of credit  agreement,
Dutchess  Private  Equities has agreed to provide Energas with up to $10,000,000
prior to  September  24,  2007.  See Item 5 of this report for more  information
concerning the equity line.

      In August 2005 the Company sold 1,200,000 shares of its common stock to
four private investors for $300,000.



                                       21
<PAGE>

In August 2005 George G. Shaw, the Company's President, converted $326,000 which
he had loaned to the Company into 1,304,000 shares of the Company's common
stock.

      In September 2005 the Company sold 714,286 share of common stock and
714,286 warrants to one private investor for $200,000. Each warrant entitles the
holder to purchase one share of the Company's common stock at a price of $0.50
per share.

      In December 2005 the Company sold 578,000 shares of its common stock to
five private investors for $306,340.

    On July 27, 2006 Energas borrowed $500,000 from Dutchess Private Equities.
In consideration for the loan Energas agreed to pay Dutchess $650,000 no later
than July 26, 2007. The $150,000 difference between the amount borrowed and the
amount Energas was required to repay was treated as loan discount which will be
amortized to interest expense over the life of the loan. As further
consideration for the loan, Energas issued 800,000 shares of its common stock to
Dutchess. The 800,000 shares were valued at $116,000 and treated as an
additional loan discount that will be amortized to interest expense over the
term of the loan. Prior to April 30, 2007 Energas used the amounts received from
sales of common stock under the Equity Line of Credit to repay this loan. In
June 2007 the loan to Dutchess Private Equities was paid in full.

    In January 2007 the Company entered into an agreement with an unrelated
third party for the sale of all its Pulaski County, Kentucky properties,
gathering systems and equipment for $1,735,000. As of January 31, 2007 the
Company had received cash payments of $557,000 from the third party of which
$200,000 was for the sale of certain royalty rights held by the Company and
$357,000 represented a deposit on the sale of the remainder of properties,
gathering systems, and equipment. The sale of the royalties was completed on
January 25, 2007 and the sale was treated as a reduction in the carrying amount
of the oil and gas properties in accordance with the full cost method of
accounting for oil and gas properties. The remainder of the sale is expected to
close by June 30, 2007 and the $357,000 received has been recorded as a deposit
as of January 31, 2007.

Contractual Obligations

      Except as shown in the following table, as of January 31, 2007, the
Company did not have any material capital commitments, other than funding its
operating losses and repaying outstanding debt. It is anticipated that any
capital commitments that may occur will be financed principally through
borrowings from institutional and private lenders (although such additional
financing has not been arranged) and the sale of shares of the Company's common
stock or other equity securities. However, there can be no assurance that
additional capital resources and financings will be available to the Company on
a timely basis, or if available, on acceptable terms.

      Future payments due on the Company's contractual obligations as of January
31, 2007 are as follows:


                                       22
<PAGE>

                        Total             2007           2008-2009
                        -----             ----           ---------

Notes payable         $776,877         $668,575 (1)   $         --
Operating leases        13,697            9,154             13,697
                    ----------       ----------           --------
                      $790,574         $677,729            $13,697
                      ========         ========            =======

(1)  Includes $468,571 that was payable to Dutchess Private Equities. In June
     2007 the Company paid this loan in full.

ITEM 7.  FINANCIAL STATEMENTS
-----------------------------

      See the financial statements attached to this report.

ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS.
------------------------------------------------------

      Not Applicable

ITEM 8A.  CONTROLS AND PROCEDURES
---------------------------------

      George Shaw, the Company's Chief Executive and Principal Financial
Officer, has evaluated the effectiveness of the Company's disclosure controls
and procedures as of the end of the period covered by this report; and in his
opinion the Company's disclosure controls and procedures are effective to ensure
that material information relating to the Company, including its consolidated
subsidiaries, is made known to him by others within those entities, particularly
during the period in which this report is being prepared, so as to allow timely
decisions regarding required disclosure. There have been no changes in the
Company's internal controls over financial reporting that occurred subsequent to
the date of evaluation that have matertially affected, or are reasonably likely
to materially affect, the Company's internal control over financial reporting.
As a result, no corrective actions with regard to significant deficiencies or
material weakness in the Company's internal controls were required.

ITEM 8B.  OTHER INFORMATION
----------------------------

      Not Applicable

ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
----------------------------------------------------------------------

      The Company's executive officers and directors are listed below. The
Company's directors are generally elected at the annual shareholders' meeting
and hold office until the next annual shareholders' meeting or until their
successors are elected and qualified. The Company's executive officers are
elected by our board of directors and serve at its discretion.


                                       23
<PAGE>


Name                 Age      Position
----                 ---      --------

George G. Shaw       76       President, Principal Financial Officer, Principal
                              Accounting Officer and a Director
G. Scott Shaw        36       Vice President, Secretary and a Director

      The following is a brief description of the business background of the
Company's executive officers and directors:

     GEORGE G. SHAW is the President,  Principal  Financial  Officer,  Principal
Accounting  Officer and a director of the Company.  Mr. Shaw has been an officer
and director of the Company  since July 1991.  Mr. Shaw is the  President of the
Company  Corporation  and its  subsidiary the Company  Pipeline Co., Inc.,  both
privately held companies  engaged in oil and gas  exploration and gas gathering.
Mr. Shaw is the father of G. Scott Shaw.

      G. SCOTT SHAW is the Vice President and a director of the Company and has
held these positions since August 1996. Mr. Shaw became the Company's Secretary
in April 2003. Mr. Shaw graduated from Oklahoma State University in 1993 with a
Bachelor of Science degree in Biology. Mr. Shaw is the son of George G. Shaw.

      The Company does not have a compensation committee. The Company's Board of
Directors serves as the Company's Audit Committee. The Company does not have a
financial expert as a member of its Board of Directors. None of the Company's
directors are independent as that term is defined Section 121(A) of the Listing
Standards of the American Stock Exchange.

      The Company has adopted a Code of Ethics which is applicable to the
Company's principal executive, financial, and accounting officers and persons
performing similar functions. The Code of Ethics is available on the Company's
website located at www.energasresources.com

ITEM 10.  EXECUTIVE COMPENSATION
--------------------------------

      The following table shows the compensation during the three years ended
January 31, 2007, paid or accrued, to George G. Shaw, the Company's Chief
Executive Officer during those years. None of the Company's executive officers
received compensation in excess of $100,000 during the three years ended January
31, 2007.
                                                               All
                                                              Other
                                                              Annual
                                             Stock   Option   Compen-
Name and Principal  Fiscal  Salary   Bonus   Awards  Awards   sation
     Position        Year    (1)      (2)     (3)     (4)      (5)       Total
------------------  ------  ------   -----   ------  ------   -------    -----

George Shaw,         2007  $36,000  $4,500   $5,200      --        --   $45,700
 President           2006  $36,000      --  $18,500                --   $54,500
                     2005  $36,000      --       --      --        --   $36,000

(1)  The dollar value of base salary (cash and non-cash) received.


                                       24
<PAGE>

(2)  The dollar value of bonus (cash and non-cash) received.
(3)  During the periods covered by the table,  the value of the Company's shares
     issued as compensation for services calculated in accordance with FAS 123R.
(4)  The amount  recognized  for  financial  statement  reporting  purposes  and
     calculated  in accordance  with FAS 123R,  for options  awarded  during the
     year.
(5)  All other compensation  received that the Company could not properly report
     in any other column of the table.

    The following shows the amounts which the Company expects to pay to its
officers during the twelve month period ending January 31, 2008, and the time
which the Company's executive officers plan to devote to the Company's business.
The Company does not have employment agreements with any of its officers.

                                Proposed              Time to Be Devoted
Name                          Compensation            To Company's Business

George G. Shaw                   $78,000                      100%
G. Scott Shaw                    $66,000                      100%

      The Company does not have any employment agreements with its officers or
employees. The Company does not maintain any keyman insurance on the life or in
the event of disability of any of its officers.

STOCK OPTION AND BONUS PLANS

      Incentive Stock Option Plan. The Company's Incentive Stock Option Plan
authorizes the issuance of up to 2,000,000 shares of the Company's common stock
to persons that exercise options granted pursuant to the Plan. Only Company
employees may be granted options pursuant to the Incentive Stock Option Plan.
The option exercise price is determined by the Company's Board of Directors but
cannot be less than the market price of the Company's common stock on the date
the option is granted.

      Non-Qualified Stock Option Plan. The Company's Non-Qualified Stock Option
Plan authorizes the issuance of up to 1,000,000 shares of the Company's common
stock to persons that exercise options granted pursuant to the Plans. The
Company's employees, directors, officers, consultants and advisors are eligible
to be granted options pursuant to the Plans, provided however that bona fide
services must be rendered by such consultants or advisors and such services must
not be in connection with the offer or sale of securities in a capital-raising
transaction. The option exercise price is determined by the Company's Board of
Directors.

      Stock Bonus Plan. The Company's Stock Bonus Plan allows for the issuance
of up to 4,000,000 shares of common stock. Such shares may consist, in whole or
in part, of authorized but unissued shares, or treasury shares. Under the Stock
Bonus Plan, the Company's employees, directors, officers, consultants and
advisors are eligible to receive a grant of the Company's shares, provided
however that bona fide services must be rendered by consultants or advisors and
such services must not be in connection with the offer or sale of securities in
a capital-raising transaction.


                                       25
<PAGE>

      The following table shows the weighted average exercise price of the
outstanding options granted pursuant to the Company's Incentive and
Non-Qualified Stock Option Plans as of January 31, 2007. The Company's Incentive
and Non-Qualified Stock Option Plans were not approved by the Company's
shareholders.
                                                            Number of Securities
                                                            Remaining Available
                             Number                         For Future Issuance
                          of Securities                         Under Equity
                          to be Issued   Weighted-Average   Compensation Plans
                          Upon Exercise  Exercise Price of (Excluding Securities
                          of Outstanding  of Outstanding        Reflected in
Plan Category               Options  [a]      Options           Column (a))
--------------------------------------------------------------------------------

Incentive Stock                 --             --              2,000,000
   Option Plan
Non-Qualified Stock
   Option Plan                  --             --                750,000

     The following  table provides  information as of April 30, 2007  concerning
the stock  options  and stock  bonuses  granted by the  Company  pursuant to the
Plans.  Each option  represents the right to purchase one share of the Company's
common stock.


                                Total       Shares                   Remaining
                                Shares   Reserved for    Shares       Options/
                               Reserved   Outstanding   Issued As      Shares
Name of Plan                  Under Plans   Options    Stock Bonus   Under Plans
------------                  ----------- ------------ -----------   -----------

Incentive Stock Option Plan     2,000,000         --          N/A    2,000,000
Non-Qualified Stock Option Plan 1,000,000         --          N/A      750,000
Stock Bonus Plan                4,000,000        N/A    2,036,981    1,963,019

     The  following  table  summarizes  the  options and stock  bonuses  granted
pursuant to the Plans as of April 30, 2007:

Incentive Stock Options
-----------------------
                                                                    Options
 Shares Subject        Exercise    Date of       Expiration      Exercised as of
    To Option           Price       Grant      Date of Option     June 30, 2005
---------------        --------    -------     --------------    --------------


                                      None.

Non-Qualified Stock Options
---------------------------

                                                                     Options
 Shares Subject        Exercise    Date of       Expiration      Exercised as of
    To Option           Price       Grant      Date of Option     June 30, 2005
---------------        --------    -------     --------------    --------------

    250,000              $0.32     6-30-03         7-15-05           250,000


                                       26
<PAGE>

Stock Bonuses
-------------

     Name             Shares Issued as Stock Bonus (1)   Date Issued
     ----             --------------------------------   -----------

George Shaw                     100,000                   10/30/03
Scott Shaw                      100,000                   10/30/03
Employees and consultants     1,536,981                   various dates
                              ---------
                              1,736,981

(1) In October 2006 the Company issued 150,000 shares of its common stock to
George Shaw and 150,000 shares to Scott Shaw for services rendered. However the
shares issued in October 2006 were not issued pursuant to the Company's Stock
Bonus Plan.

Other Warrants and Convertible Securities

      See Item 5 of this report for information concerning other outstanding
options and warrants.

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

     The following table shows the ownership of the Company's common stock as of
April  30,  2007 by (i)  each  person  who is  known  to the  Company  to be the
beneficial owner of more than 5% the Company's common stock,  (ii) each director
and  executive  officer of the  Company,  and (iii) all  executive  officers and
directors  of the Company as a group.  All  persons  listed have sole voting and
investment  power with respect to their shares unless otherwise  indicated,  and
there are no family  relationships among the executive officers and directors of
the  Company,  except that  George G. Shaw is the father of G. Scott  Shaw.  For
purposes  of the table,  the number of shares and  percent of  ownership  of the
common stock that the named person  beneficially  owns includes  shares that the
person has the right to acquire on or before June 30, 2006 from the  exercise of
stock options or otherwise.

                                                  Shares          Percent of
                                                Beneficially      Outstanding
Name and address                                   Owned             Shares
----------------                                ------------      -----------

George G. Shaw                                   18,701,689            24%
Third Floor, 800 Northeast 63rd Street
Oklahoma City, Oklahoma 73105

G. Scott Shaw                                    868,385                1%
800 Northeast 63rd Street
Oklahoma City, Oklahoma 73105




                                       27
<PAGE>

                                                  Shares          Percent of
                                                Beneficially      Outstanding
Name and address                                   Owned             Shares
----------------                                ------------      -----------

Terry R. and Marguerite S. Tyson               8,792,800               11%
16250 County Rd. U
Lipscomb, TX  79056-6304

Executive Officers and Directors as a group   19,870,074               25%
 (two persons)

(1)  Includes (i) 2,024,916 shares held by Energas Corporation, of which
     1,759,680 of these shares are subject to a time-release escrow agreement,
     (ii) 3,460,320 shares held by Energas Pipeline Co., Inc. which are subject
     to a time-based escrow agreement and (iii) 1,585,000 shares of common stock
     held by Mr. Shaw. The shares held under the escrow agreements will be
     released from escrow in 12 six month installments commencing on March 21,
     2002 (initially four installments of 290,000 shares of common stock
     followed by eight installments of 580,000 shares of common stock). Mr. Shaw
     controls Energas Corporation and Energas Pipeline Co., Inc.

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
---------------------------------------------------------

      The Company's offices are located at 800 Northeast 63rd Street, Oklahoma
City, Oklahoma. The office space is occupied under an unwritten month-to-month
lease requiring rental payments of $3,800 per month to George Shaw, the owner of
the building. During the years ended January 31, 2007, 2006 and 2005 the Company
paid rent of $49,400, $45,600 and $45,600, respectively. In addition, Mr. Shaw
owns Energas Pipeline Company that operates the natural gas gathering system to
which the Company's four wells in Atoka County, Oklahoma are connected. During
the years ended January 31, 2007, 2006 and 2005 Energas Pipeline Company
received $16,820, $14,495 and $14,322, respectively, for operating the gathering
system.

      As of April 30, 2005 the Company had borrowed $305,350 from George Shaw.
These loans were non-interest bearing, unsecured, and did not have fixed terms
of repayment. The amounts borrowed from Mr. Shaw were used to fund the Company's
operations. In May 2005 Mr. Shaw converted the $305,350 owed to him into
1,221,400 restricted shares of the Company's common stock.

      As of September 30, 2006 the Company had borrowed $313,000 from George
Shaw. These loans were non-interest bearing, unsecured, and did not have fixed
terms of repayment. The amounts borrowed from Mr. Shaw were used to fund the
Company's operations. In October 2006 Mr. Shaw converted the $313,000 owed to
him into 10,433,333 restricted shares of the Company's common stock.

      As of April 30, 2007 the Company had borrowed $57,311 from Mr. Shaw. These
loans are non-interest bearing, unsecured, and do not have fixed terms of
repayment. The amounts borrowed from Mr. Shaw were used to fund the Company's
operations.

      The Company believes that the rent paid to Mr. Shaw and the terms of the
other transactions between the Company and its officers and directors discussed
above were fair and reasonable and were upon terms as least as favorable as the
Company could have obtained from unrelated third parties.


                                       28
<PAGE>

      In September 2003 the Company agreed to sell 2,000,000 shares of its
common stock to Terry Tyson, now a principal shareholder of the Company, for
$0.15 a share. For each share purchased the Company agreed to issue one warrant
to Mr. Tyson. For each warrant exercised, the Company agreed to issue a second
warrant to Mr. Tyson. Each warrant entitled Mr. Tyson to purchase one share of
the Company's common stock at a price of $0.20 per share at any time on or
before December 31, 2004 and at a price of $0.30 per share at any time after
December 31, 2004. All warrants expired on September 30, 2005. As of April 30,
2007 Mr. Tyson had purchased 2,000,000 shares from the Company and had exercised
4,000,000 warrants. Since May 2004 Mr. Tyson has purchased additional shares of
the Company's common stock in open market transactions or from other
shareholders in privately negotiated transactions.

      During the six months ended June 30, 2004, the Company sold 5,000,000
shares of common stock and 5,000,000 warrants to private investors for
$1,500,000. Each warrant entitled the holder to purchase one share of the
Company's common stock at a price of $0.50 per share at any time prior to
January 31, 2006. As of January 31, 2007 warrants to purchase 3,506,000 shares
had been exercised and the remaining warrants had expired. Terry Tyson purchased
600,000 shares of common stock and 600,000 warrants in this offering, of which
120,000 warrants were exercised.

      Transactions with the Company's officers, directors, and principal
shareholders may continue and may result in conflicts of interest between the
Company and these individuals. Although these persons have fiduciary duties to
the Company and its shareholders, there can be no assurance that conflicts of
interest will always be resolved in favor of Company and its shareholders.
Neither the Company's Articles of Incorporation nor Bylaws contain any
provisions for resolving potential or actual conflicts of interest.

ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K

Exhibit
  No.       Description of Exhibit                                Page Number
-------     ----------------------                                -----------

3.1   Certificate of Incorporation                                     *

3.2   Bylaws                                                           *

3.3   Certificate of Domestication in Delaware                         *

4.1   Form of Certificate of Common Stock                              *

4.6   Escrow Amendment Agreement among Registrant,  Pacific
       Corporate Trust Company, Energas Corporation and
       Energas Pipeline Company                                        *

4.7   Escrow Agreement, dated September 20, 1991, among
       Registrant,  Pacific Corporate Trust Company, Energas
       Corporation and Energas Pipeline Company                        *


                                       29
<PAGE>

Exhibit
  No.       Description of Exhibit                                Page Number
-------     ----------------------                                -----------

4.8    Registration Rights Agreement, dated July 18, 2001
        between Registrant and Clare, LLC                              *

4.9    Escrow Amendment Agreement, dated April 13, 1994, among
        Registrant,  Pacific Corporate Trust Company, Energas
        Corporation and Energas Pipeline Company                       *

10.7   Gas Purchase  Agreement,  dated March 1, 1991 between
        Registrant and Energas Pipeline Company.                       *

10.8   Gas Purchase Agreement, dated March 1, 1991 between
        Registrant and Energas Pipeline  Company.                      *

10.9   Gas Gathering  Agreement,  dated July 1, 1992 between
        Energas Pipeline  Company,  Inc. and A.T. Gas Gathering
        Systems, Inc.                                                  *

10.10  Gas Purchase  Agreement,  dated February 13, 1997,
        between  Panenergy Field Services, Inc. and Energas
        Pipeline Company.                                              *

10.11  Gas Purchase  Agreement,  dated  October 1, 1999,
        between  Registrant  and Ozark Gas Gathering, L.L.C.           *

21.    Registrant's Subsidiaries                                       *

23.    Consent of Accountants                                      _____

31.    Rule 13a-14(a)/15d-14(a) certifications

32.    Section 1350 certifications

*  Incorporated by referenced to the same exhibit filed with the Company's
   initial registration statement on Form 10-SB.

** Incorporated by reference to the same exhibit filed with the Company's report
   on Form 8-K dated June 27, 2005.

ITEM 14.    PRINCIPAL ACCOUNTANT FEES AND SERVICES

      Murrell, Hall, McIntosh & Co., PLLP served as the Company's independent
public accountants during the fiscal years ended January 31, 2007 and 2006. The
following table shows the aggregate fees billed to the Company during the years
ended January 31, 2007 and 2006 by Murrell, Hall, McIntosh & Co., PLLP.


                                       30
<PAGE>


                                                  2007           2006
                                                  ----           ----

      Audit Fees                            $71,959.50     $75,831.35
      Audit-Related Fees                           --           --
      Financial Information Systems                --           --
      Design and Implementation Fees               --           --
      Tax Fees                                     --           --
      All Other Fees                               --           --

    Audit fees represent amounts billed for professional services rendered for
the audit of the Company's annual financial statements and the reviews of the
financial statements included in the Company's 10-Q reports during the fiscal
year. Before Murrell, Hall, McIntosh & Co., PLLP was engaged by the Company to
render audit services, the engagement was approved by the Company's Board of
Directors.



                                       31
<PAGE>





                             ENERGAS RESOURCES, INC.

                              FINANCIAL STATEMENTS



<PAGE>



             Report of Independent Registered Public Accounting Firm

To the Board of Directors
Energas Resources, Inc.

We have audited the accompanying consolidated balance sheet of Energas
Resources, Inc. and its subsidiaries as of January 31, 2007, and the related
consolidated statements of operations, changes in stockholders' equity, and cash
flows for the years ended January 31, 2007 and 2006. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement. The Company
is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. Our audit included consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Company's internal control
over financial reporting. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the consolidated financial statements, assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Energas Resources,
Inc. and its subsidiaries as of January 31, 2006, and the consolidated results
of its operations and its consolidated cash flows for the years ended January
31, 2007 and 2006 in conformity with accounting principles generally accepted in
the United States of America.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company has suffered recurring losses from operations,
which raise substantial doubt about its ability to continue as a going concern.
Management's plans regarding those matters also are described in Note 2. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.


/s/Murrell, Hall, McIntosh & Co., PLLP

June 7, 2007
Oklahoma City, Oklahoma

<PAGE>


                             ENERGAS RESOURCES, INC.
                           CONSOLIDATED BALANCE SHEET
                                January 31, 2007

                                     ASSETS

Current Assets
 Cash                                                        $  529,622
 Accounts receivable                                             68,911
 Prepaid expenses                                                   400
 Assets held for sale, net of impairment of $282,737          1,535,000
                                                             -----------
 Total Current Assets                                         2,133,933
                                                             -----------
Property and Equipment
 Oil and gas properties, using full cost accounting
 Proved properties                                            5,202,576
 Unproved properties                                            144,483
 Pipelines                                                    1,028,101
                                                             -----------
                                                              6,375,160

 Less accumulated depreciation, depletion, and
   amortization, including impairment of $682,459            (2,208,931)
                                                             -----------
                                                              4,166,229
 Other, net of accumulated depreciation of $57,726O              39,597
                                                             -----------
                                                              4,205,826
                                                             -----------
                                                             $6,339,759
                                                             ===========

         LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

Current Liabilities
 Accounts payable and accrued expenses                          499,855
 Deposits held on assets held for sale                          357,000
 Due to shareholders and related parties                         90,612
 Other current liablilites                                       11,992
 Current notes payable                                          643,877
                                                             -----------
 Total Current Liabilities                                    1,603,336
                                                             -----------
Asset Retirement Obligation                                     103,686

Stockholders' Equity
 Common stock, $.001 par value 100,000,000 shares
  authorized 74,472,914 shares issued and
  outstanding at January 31, 2007                                74,473
 Additional paid in capital                                  18,872,326
 Retained (deficit)                                         (14,314,062)
                                                           -------------
Total Stockholders' Equity                                    4,632,737
                                                           -------------
Total Liabilities and Stockholders' Equity                 $  6,339,759
                                                           =============

See accompanying summary of accounting policies and notes to the consolidated
financial statements.

                                       1

<PAGE>

                             ENERGAS RESOURCES, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS


                                               Year ended
                                               January 31,
                                   ------------------------------------
                                          2007             2006
                                   ------------------------------------

  Revenue
   Oil and gas sales                $    630,529        $ 1,183,118
   Pipeline revenue                       13,831             14,134
                                   --------------      -------------
   Total Revenue                         644,360          1,197,252

  Operating Expenses
   Lease operating expense               258,583            292,047
   Pipeline and gathering expense        173,824            225,487
   General and administrative
    expense                              739,164          1,141,348
   Depreciation, depletion and
    amortization                         334,535            545,662
                                   --------------      -------------
   Total Operating Expenses            1,506,106          2,204,544
                                   --------------      -------------

  Operating (Loss)                      (861,746)        (1,007,292)
                                   --------------      -------------
  Other (Expenses) Income
   Other income                              703                347
   Settlement expense                    (20,000)           (21,500)
   Property impairment                  (445,148)          (520,048)
   Loss on disposal of asset             (30,907)                 -
   Interest expense                     (159,184)           (35,008)
                                   --------------      -------------
   Total Other (Expense)                (654,536)          (576,209)
                                   --------------      -------------
  Net (Loss) before Income Taxes      (1,516,282)        (1,583,501)

  Provision for income taxes                   -                  -
                                   --------------      -------------
  Net (Loss)                       $  (1,516,282)      $ (1,583,501)
                                   ==============      =============

  Net (Loss) per Share, Basic and
  Diluted                          $       (0.02)      $      (0.03)
                                   ==============      =============

  Weighted average of number of
  shares outstanding                  63,129,982         52,513,509
                                   ==============      =============


See accompanying summary of accounting policies and notes to the consolidated
financial statements.

                                       2

<PAGE>


                             ENERGAS RESOURCES, INC.
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                    FOR THE YEARS ENDED JANUARY 31, 2007 AND
                                JANUARY 31, 2006
<TABLE>
<S>                                         <C>            <C>              <C>             <C>            <C>

                                               Common Stock             Additional                        Total
                                          ---------------------          Paid-In       Accumulated     Shareholders'
                                          Shares         Amount          Capital         Deficit          Equity
                                          ------         ------          -------       -----------     -------------


Balance, January 31, 2005               49,660,635    $   49,661      $ 14,965,173   $ (11,214,279)   $  3,800,555

Net loss                                         -             -                 -      (1,583,501)     (1,583,501)

Stock issued for equity line of credit     629,912           630           224,503               -         225,133
Options exercised for common stock          40,000            40            12,760               -          12,800
Warrants exercised for common stock      2,251,000         2,251         1,123,249               -       1,125,500
Private placement of stock               2,492,286         2,492           803,848               -         806,340
Conversion of notes payable to stock     1,250,000         1,250           473,750               -         475,000
Conversion related party note payable
 to stock                                1,304,000         1,304           324,696               -         326,000
Stock issued for consulting services       100,000           100            39,900               -          40,000
Employee stock plan                        504,133           504           135,246               -         135,750
                                      -------------   -----------    --------------    ------------   -------------
Balance, January 31, 2006               58,231,966        58,232        18,103,125     (12,797,780)      5,363,577

Net loss                                         -             -                 -      (1,516,282)     (1,516,282)

Stock issued for equity line of credit     257,810           258           132,055               -         132,313
Stock issued for loan repayment          3,696,032         3,696           177,733               -         181,429
Stock issued for loan discount             800,000           800           115,200               -         116,000
Stock issued for consulting services       254,668           255            14,745               -          15,000
Conversion of related party notes
 payable to stock                       10,433,333        10,433           302,567               -         313,000
Employee stock plan                        799,105           799            26,901               -          27,700
                                      -------------   -----------    --------------    ------------   -------------
Balance, January 31, 2007               74,472,914    $   74,473     $  18,872,326    $(14,314,062)   $  4,632,737
                                      =============   ===========    ==============   =============   =============

</TABLE>

           See accompanying summary of accounting policies and notes to the
consolidated financial statements.

                                       3

<PAGE>


                             ENERGAS RESOURCES, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                             Year ended
                                                             January 31,
                                                     ---------------------------
                                                         2007           2006
                                                     ---------------------------

Cash Flows From Operating Activities
 Net (Loss)                                        $ (1,516,282)   $ (1,583,501)
 Adjustments to reconcile net loss to net cash
  provided by operating activities
 Depreciation, depletion and amortization               334,535         545,662
 Property impairment                                    445,148         520,048
 Loss on disposal of asset                               30,907               -
 Amortization of loan discount                          133,000               -
 Stock issued for salaries                               27,700         135,750
 Stock issued for consulting                             15,000          40,000
 (Increase) Decrease in
   Accounts receivable                                  123,445          20,856
   Prepaid expense                                        8,084          (8,484)
 Increase (Decrease) in
   Accounts payable and accrued expenses               (112,407)        227,907
   Deposits held                                        357,000
   Other assets                                               -          17,086
   Asset retirement obligation                            6,930           9,957
                                                  --------------  --------------
 Net Cash Flows (Used By) Operating Activities
                                                       (146,940)        (74,719)

Cash Flows From Investing Activities
 (Investment in) oil and gas properties                (219,167)     (2,044,420)
 Sale of oil and gas properties                         400,000          28,535
 (Purchase of) property and equipment                  (124,293)     (1,151,208)
                                                  --------------  --------------
 Net Cash Provided By (Used By) Investing Activities     56,540      (3,167,093)

Cash Flows from Financing Activities
 Advances from related parties and stockholders         214,288         205,682
 Aale of common stock                                   132,313       2,169,773
 Loan proceeds                                          500,000       1,269,087
 Payments on notes payable                             (156,688)        (10,647)
 Settlement payments                                   (650,000)              -
                                                  --------------  --------------
 Net Cash Provided By Financing Activities               39,913       3,633,895

Increase (Decrease) in Cash                             (50,487)        392,083
Cash at Beginning of Year                               580,109         188,026
                                                  --------------  --------------
Cash at End of Period                             $     529,622   $     580,109
                                                  ==============  ==============

Supplemental Information:
 Interest Paid in Cash                            $      36,878   $       7,264

 Non-Cash Transactions:
 Debt converted into 10,433,333
  and 2,554,000 shares of common stock            $     313,000   $     801,000
 Advances from shareholder settled for
   40,000 options for common stock                $           -   $      12,800
 Stock issued for salaries                        $      27,700   $     135,750
 Stock issued for consulting                      $      15,000   $      40,000
 Asset Retirement Obligation                      $       3,465   $       8,224
 Stock issued for payments on notes payables      $     181,429   $           -

See  accompanying  summary of accounting  policies and notes to the consolidated
financial statements.

                                       4

<PAGE>

                             ENERGAS RESOURCES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      YEARS ENDED JANUARY 31, 2007 AND 2006

1.  NATURE OF OPERATIONS

Energas Resources, Inc. (the "Company") was originally incorporated in 1989 in
British Columbia, Canada as a public company listed on the Canadian Venture
Exchange. In 2001, the Company registered as a Delaware corporation becoming a
United States domestic corporation. In 2002, its registration statement filed
with the Securities and Exchange Commission became effective and its stock is
traded in the Over the Counter (OTC) market.

The Company is primarily engaged in the operation, development, production,
exploration and acquisition of petroleum and natural gas properties in the
United States through its wholly-owned subsidiaries, A.T. Gas Gathering Systems,
Inc. ("AT GAS"), and TGC, Inc. ("TGC"). In addition, the Company owns and
operates natural gas gathering systems, located in Oklahoma and Kentucky, which
serve wells operated by the Company for delivery to a mainline transmission
system. The majority of the Company's operations are maintained and occur
through AT GAS and TGC. AT GAS is a company incorporated in the state of
Oklahoma and TGC is a company incorporated in the state of Kentucky.

2.  GOING CONCERN

The Company is in the process of acquiring and developing petroleum and natural
gas properties with adequate production and reserves to operate profitably. The
Company is also in the process of selling certain assets to provide cash
resources that are necessary to continue the operations of the Company (Note 5).
As of January 31, 2007, the Company had incurred losses for the years ended
January 31, 2007 and 2006 of $(1,516,282) and $(1,583,501), respectively. The
Company's ability to continue as a going concern is dependent upon obtaining
financing and achieving profitable levels of operations. The Company is
currently seeking additional funds and additional mineral interests through
private placements of equity and debt instruments. There can be no assurance
that its efforts will be successful.

The consolidated financial statements do not give effect to any adjustments that
might be necessary if the Company is unable to continue as a going concern.

3.  SIGNIFICANT ACCOUNTING POLICIES

Basis of consolidation - The consolidated financial statements include the
accounts of the Company and its wholly-owned subsidiaries, AT Gas and TGC. All
significant inter-company items have been eliminated in consolidation.

Use of estimates in the preparation of financial statements - The preparation of
financial statements in conformity with accounting principles generally accepted
in the United States of America requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial


                                       5
<PAGE>

statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

Revenue recognition - Oil and natural gas revenue is recognized at the time
title is transferred to the customer. Pipeline revenue is earned as a gathering
fee at the time the gas is delivered to the customer.

Petroleum and natural gas properties - The Company employs the full cost method
of accounting for petroleum and natural gas properties whereby all costs
relating to exploration and development of reserves are capitalized. Such costs
include land acquisition costs, geological and geophysical costs, costs of
drilling both productive and non-productive wells, and related overhead.

Capitalized costs, excluding costs relating to unproven properties, are depleted
using the unit-of-production method based on estimated proven reserves, as
prepared by an independent engineer. For the purposes of the depletion
calculation, proven reserves are converted to a common unit of measure on the
basis of their approximate relative energy content. Investments in unproved
properties are not amortized until the proved reserves associated with the
projects can be determined or until impairment occurs. If an assessment of such
properties indicates that properties are impaired, the amount of impairment is
added to the capitalized cost base to be amortized.

Under the full cost method, the net book value of natural gas and oil
properties, less related deferred income taxes, may not exceed a calculated
"ceiling". The ceiling is the estimated after-tax future net revenue from proved
natural gas and oil properties, discounted at 10% per annum plus the lower of
cost or fair market value of unproved properties. In calculating future net
revenues, prices and costs in effect at the time of the calculation are held
constant indefinitely, except for changes that are fixed and determinable by
existing contracts. The net book value is compared to the ceiling on an annual
basis. The excess, if any, of the net book value above the ceiling is required
to be written off as an expense.

Proceeds on disposal of properties are normally applied as a reduction of the
capitalized costs without recognition of a gain or loss, unless such amounts
would significantly alter the relationship between capitalized costs and proved
reserves of oil and gas, in which case gain or loss would be recognized.
Abandonment of properties are accounted for as adjustments of capitalized costs
with no loss recognized, unless such adjustment would significantly alter the
relationship between capitalized costs and proved reserves of oil and gas
attributable to a cost center.

Long-lived assets - The Company reviews its long-lived assets for impairment
whenever changes in circumstances indicate that the carrying amount of an asset
may not be recoverable. For purposes of evaluating the recoverability of
long-lived assets, the recoverability test is performed using estimated
undiscounted net cash flows to be generated by the asset.

Equipment - Equipment is recorded at cost and depreciated on the Straight-line
basis over the following periods:


                                       6
<PAGE>

                  Computer equipment         5-7 years
                  Truck                        7 years
                  Office equipment           5-7 years
                  Computer software            5 years
                  Gathering systems           30 years

Asset Retirement Obligations - In accordance with the provisions of SFAS No. 143
Accounting for Asset Retirement Obligations the Company records the fair value
of its liability for asset retirement obligations in the period in which it is
incurred and a corresponding increase in the carrying amount of the related
long-lived assets. Over time, the liability is accreted to its present value at
the end of each reporting period, and the capitalized cost is depreciated over
the useful life of the related assets. Upon settlement of the liability, the
Company will either settle the obligation for its recorded amount or incur a
gain or loss upon settlement. The Company's asset retirement obligations relate
to the plugging and abandonment of its natural gas properties.

Accounts Receivable - Management periodically assesses the collectibility of the
Company's accounts receivable. Accounts determined to be uncollectible are
charged to operations when that determination is made.

Earnings per share - The Company follows SFAS No. 128 Earnings per Share, for
computing and presenting earnings per share, which requires, among other things,
dual presentation of basic and diluted earnings per share on the face of the
statement of operations. Basic EPS is computed by dividing income available to
common shareholders by the weighted average number of common shares outstanding
for the period. Diluted EPS reflects the potential dilution that could occur if
securities, options or warrants were exercised or converted into common shares
or resulted in the issuance of common shares that then share in the earnings of
the entity. For the years ended January 31, 2007 and 2006, no options or
warrants were considered common stock equivalents as their effect would be
anti-dilutive.

Stock-based compensation - Effective February 1, 2006, the beginning of the
Company's first fiscal quarter of 2006, the Company adopted the fair value
recognition provisions of SFAS 123R, using the modified-prospective transition
method. Under this transition method, stock-based compensation expense will be
recognized in the consolidated financial statements for granted, modified, or
settled stock options. Compensation expense recognized included the estimated
expense for stock options granted on and subsequent to February 1, 2006, based
on the grant date fair value estimated in accordance with the provisions of SFAS
123R, and the estimated expense for the portion vesting in the period for
options granted prior to, but not vested as of February 1, 2006, based on the
grant date fair value estimated in accordance with the original provisions of
SFAS 123. Results for prior periods have not been restated, as provided for
under the modified-prospective method.

SFAS 123R requires forfeitures to be estimated at the time of grant and revised,
if necessary, in subsequent periods if actual forfeitures differ from those
estimates. In the Company's pro forma information required under SFAS 123R for
the periods prior to fiscal 2007, the Company accounted for forfeitures as they
occurred.


                                       7
<PAGE>

Upon adoption of SFAS 123R, the Company is using the Black-Scholes
option-pricing model as its method of valuation for share-based awards granted
beginning in fiscal 2007. The Company's determination of fair value of
share-based payment awards on the date of grant using an option-pricing model is
affected by the Company's stock price as well as assumptions regarding a number
of highly complex and subjective variables. These variables include, but are not
limited to the Company's expected stock price volatility over the term of the
awards, and certain other market variables such as the risk free interest rate.

Since no options were granted, modified or settled during fiscal 2007, there was
no stock-based compensation expense included in net income for the year ended
January 31, 2007.

Cash and cash equivalents - For purposes of the statement of cash flows, the
Company considers all highly liquid debt instruments purchased with a maturity
of six months or less to be cash equivalents.

Concentration of credit risk - The Company maintains its cash in bank deposit
accounts which, at times, may exceed federally insured limits. The Company has
not experienced any losses in such accounts and believes it is not exposed to
any significant risk.

Income taxes - Income taxes are accounted for under the asset and liability
method. Deferred tax assets and liabilities are recognized for future timing
differences between the financial statement carrying amounts and their
respective tax bases. Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered.

Reclassifications - Certain prior period amounts have been reclassified to
conform to current period presentation.

New Accounting Pronouncements - In March 2005, the FASB issued FASB
Interpretation No. 47, Accounting for Conditional Asset Retirement Obligations
("FIN 47"). FIN 47 clarifies the definition and treatment of conditional asset
retirement obligations as discussed in SFAS No. 143, Accounting for Asset
Retirement Obligations. A conditional asset retirement obligation is defined as
an asset retirement activity in which the timing and/or method of settlement are
dependent on future events that may be outside the control of the company. FIN
47 states that a company must record a liability when incurred for conditional
asset retirement obligations if the fair value of the obligation is reasonably
estimable. FIN 47 is intended to provide more information about long-lived
assets and future cash outflows for these obligations and more consistent
recognition of these liabilities. FIN 47 is effective for fiscal years ending
after December 15, 2005. Our financial position, results of operations or cash
flows were not materially impacted by implementation of FIN 47.

In May 2005, the FASB issued SFAS No. 154, Accounting Changes and Error
Corrections, which changes the accounting for and reporting of a change of
accounting principle. It requires retrospective application of a change of
accounting principle unless impracticable. SFAS No. 154 is effective for fiscal
years beginning after December 15, 2005 and it did not have a material impact on
the Company's financial statements when adopted


                                       8
<PAGE>

In February 2006, the FASB issued Statement No. 155, "Accounting for Certain
Hybrid Financial Instruments" ("SFAS No. 155"), which amends FASB Statements No.
133 and 140. This Statement permits fair value remeasurement for any hybrid
financial instrument containing an embedded derivative that would otherwise
require bifurcation, and broadens a Qualified Special Purpose Entity's ("QSPE")
permitted holdings to include passive derivative financial instruments that
pertain to other derivative financial instruments. This Statement is effective
for all financial instruments acquired, issued or subject to a remeasurement
event occurring after the beginning of an entity's first fiscal year beginning
after September 15, 2006. This Statement has no current applicability to the
Company's financial statements. Management plans to adopt this Statement on
February 1, 2007 and it is anticipated that the initial adoption of this
Statement will not have a material impact on the Company's financial position,
results of operations, or cash flows.

In March 2006, the FASB issued Statement No. 156, "Accounting for Servicing of
Financial Assets - an amendment of FASB Statement No. 140" ("SFAS No. 156").
This Statement is effective for fiscal years beginning after September 15, 2006.
This Statement requires that all separately recognized servicing assets and
servicing liabilities be initially measured at fair value, if practicable. This
Statement has no current applicability to the Company's financial statements.
Management plans to adopt this Statement on January 1, 2007 and it is
anticipated that the initial adoption of this Statement will not have a material
impact on the Company's financial position, results of operations, or cash
flows.

In June 2006, the FASB issued Interpretation 48, "Accounting for Uncertainty in
Income Taxes" ("FIN 48"), an interpretation of FASB Statement No. 109,
"Accounting for Income Taxes." FIN 48 clarifies the accounting and reporting for
income taxes where interpretation of the law is uncertain. FIN 48 prescribes a
comprehensive model for the financial statement recognition, measurement,
presentation and disclosure of income tax uncertainties with respect to
positions taken or expected to be taken in income tax returns. FIN 48 is
effective for fiscal years beginning after December 15, 2006. This Statement has
no current applicability to the Company's financial statements. Management plans
to adopt this Statement on February 1, 2007 and it is anticipated that the
initial adoption of FIN 48 will not have a material impact on the Company's
financial position, results of operations, or cash flows.

 In September 2006, the FASB issued Statement No. 157, "Fair Value Measurements"
("SFAS No. 157"). SFAS No. 157 addresses how companies should measure fair value
when they are required to use a fair value measure for recognition or disclosure
purposes under GAAP. SFAS No. 157 defines fair value, establishes a framework
for measuring fair value and expands disclosures about fair value measurements.
SFAS No. 157 is effective for fiscal years beginning after November 15, 2007,
with earlier adoption permitted. Management is assessing the impact of the
adoption of this Statement.

In September 2006, the FASB issued Statement No. 158, "Employers' Accounting for
Defined Benefit Pension and Other Postretirement Plans" ("SFAS No. 158"), an
amendment of FASB Statements No. 87, 88, 106 and 132(R). SFAS No. 158 requires
(a) recognition of the funded status (measured as the difference between the
fair value of the plan assets and the benefit obligation) of a benefit plan as
an asset or liability in the employer's statement of financial position, (b)
measurement of the funded status as of the employer's fiscal year-end with
limited exceptions, and (c) recognition of changes in the funded status in the
year in which the changes occur through comprehensive income. The requirement to


                                       9
<PAGE>

recognize the funded status of a benefit plan and the disclosure requirements
are effective as of the end of the fiscal year ending after December 15, 2006.
The requirement to measure the plan assets and benefit obligations as of the
date of the employer's fiscal year-end statement of financial position is
effective for fiscal years ending after December 15, 2008. This Statement has no
current applicability to the Company's financial statements. Management adopted
this Statement on January 31, 2007 and the adoption of SFAS No. 158 did not have
a material impact to the Company's financial position, results of operations, or
cash flows.

In September 2006, the Securities Exchange Commission issued Staff Accounting
Bulletin No. 108 ("SAB No. 108"). SAB No. 108 addresses how the effects of prior
year uncorrected misstatements should be considered when quantifying
misstatements in current year financial statements. SAB No. 108 requires
companies to quantify misstatements using a balance sheet and income statement
approach and to evaluate whether either approach results in quantifying an error
that is material in light of relevant quantitative and qualitative factors. When
the effect of initial adoption is material, companies will record the effect as
a cumulative effect adjustment to beginning of year retained earnings and
disclose the nature and amount of each individual error being corrected in the
cumulative adjustment. SAB No. 108 was effective beginning January 1, 2007 and
the initial adoption of SAB No. 108 did not have a material impact on the
Company's financial position, results of operations, or cash flows.

4.  ACQUISITIONS AND RELATED DEBT

On August 25, 2005 the Company issued 1,250,000 shares of its common stock
valued at $475,000 to McCrome International, Inc. the third note holder, plus
cash of $21,695. This was full payment of a Promissory Note held by McCrome
International in the principal amount of $479,218, plus interest of $17,477.

On December 16, 2005 in settlement of the arbitration case with Double G Energy,
the Company entered into an agreement with Double G Energy to repurchase all of
Double G Energy's interests in the Company's wells in Pulaski County, Kentucky
for $1,000,000. Payment terms of the agreement were for an initial payment of
$250,000 at the date of settlement; $100,000 per month January 2006 through July
2006; final payment of $50,000 in August 2006. As of July 31, 2006 all payments
had been made on the agreement with Double G Energy.

5.  SALE OF OIL AND GAS PROPERTIES

Effective April 1, 2006, the Company sold its 16.75% Working Interest in three
Kansas wells for $200,000. The proceeds from these sales were treated as a
reduction in the carrying amount of oil and gas properties in accordance with
the requirements of the full cost method of accounting for oil and gas
properties.

As of January 31, 2007 the Company had entered into a sales agreement for the
sale of all Pulaski County, Kentucky properties, gathering systems and equipment
for $1,735,000. As of January 31, 2007 the Company had received cash payments of
$557,000 as result of this sales agreement of which $200,000 represented the
sale of certain royalty rights held by the Company and $357,000 represented a
deposit on the sale of the properties, gathering systems, and equipment. The


                                       10
<PAGE>

assignment of the royalties was completed on January 25, 2007 and the sale was
treated as a reduction in the carrying amount of the oil and gas properties in
accordance with the full cost method of accounting for oil and gas properties.
The remainder of the sales transaction is expected to close during the fiscal
year ending January 31, 2008 and the $357,000 received has been recorded as a
deposit as of January 31, 2007. In addition the Company has recorded an
impairment of these assets of $82,737 as of January 31, 2007 based on the
estimated fair value of these assets that are held for sale. These assets are
classified on the balance sheet as properties held for sale at January 31, 2007.

6.  EQUITY LINE OF CREDIT

On September 20, 2004, the Company entered into an equity line of credit
agreement with Dutchess Private Equities Fund II, L.P. The purpose of the equity
line of credit is to provide a possible source of funding for the Company's oil
and gas exploration activities or for working capital.

Under the equity line of credit agreement, Dutchess Private Equities has agreed
to provide the Company with up to $10,000,000 of funding prior to October 14,
2007. During this period, the Company may request a drawdown under the equity
line of credit by selling shares of its common stock to Dutchess Private
Equities, and Dutchess Private Equities will be obligated to purchase the
shares. The minimum and maximum amounts the Company can draw down at any one
time are determined using a formula contained in the equity line of credit
agreement. The Company is under no obligation to request any drawdown under the
equity line of credit. As of January 31, 2007, the Company has drawn a sum of
$1,027,339, which was repaid by the issuance of 3,488,586 shares of the
Company's common stock.

7.  PROMISSORY NOTE

On July 26, 2006 the Company borrowed $500,000 under a promissory note
agreement. The face value of the note is $650,000 and does not bear interest.
Accordingly the Company has recorded a discount of $150,000 to the face value of
the note and the discount will be recognized as interest expense over the
one-year term of the note.

Monthly payments of $30,000 and $40,000 were made in August and September 2006,
respectively. In September 2006 the monthly payments increased to the greater of
$55,000 or the amount of the monthly proceeds under the equity line of credit
agreement (Note 6). Monthly payments will continue until the full principal
amount has been paid or the maturity date of the note, July 26, 2007 at which
time all unpaid principal balances are due.

As additional consideration the Company issued 800,000 of restricted common
stock valued at $116,000. The value of the common stock has been recorded as an
additional discount to the value of the promissory note, which will be
recognized as interest expense over the term of the note.

During the year ended January 31, 2007 proceeds of $106,779 from the equity line
of credit agreement were applied to the note payable. Amortization of the loan
discount in the amount of $133,000 for the year ended January 31, 2007 is
included in interest expense.


                                       11
<PAGE>

The  promissory  note is  secured  by  substantially  all of the  assets  of the
Company.

8.  RELATED PARTY

The Company sells gas from its Atoka County properties to an affiliated company,
Energas Corporation. During the years ended January 31, 2007 and 2006, these
sales were approximately $156,000 and $199,000 respectively. Energas Corporation
deducts a marketing fee of $0.10 per MCF from the price paid by the end
purchaser. The total marketing fee for the years ended January 31, 2007 and 2006
was approximately $2,835 and $1,887, respectively.

The Company's offices ares occupied under an unwritten month-to-month lease
requiring rental payments of $3,800 per month to George G. Shaw, the Company's
President and owner of the building. During the years ended January 31, 2007 and
2006 the Company paid rent of $49,400 and $45,600, respectively.

George C. Shaw, the Company's President, owns Energas Pipeline Company that
operates the natural gas gathering system to which the Company's four wells in
Atoka County, Oklahoma are connected. During the years ended January 31, 2007
and 2006 Energas Pipeline Company received $16,820 and $14,495, respectively,
for operating the gathering system.

On August 12, 2005 George G. Shaw, the Company's President, converted $326,000
which he had loaned to the Company into 1,304,000 restricted shares of the
Company's common stock.

On October 10, 2006 George G. Shaw, the Company's President, converted $313,000
which he had loaned to the Company into 10,433,333 restricted shares of the
Company's common stock.

9. INCOME TAXES

As of January 31, 2007, the Company has approximately $11,825,000 of net
operating losses expiring through 2027 that may be used to offset future taxable
income but are subject to various limitations imposed by rules and regulations
of the Internal Revenue Service. The net operating losses are limited each year
to offset future taxable income, if any, due to the change of ownership in the
Company's outstanding shares of common stock. In addition, at January 31, 2007,
the Company had an unused Canadian net operating loss carry-forward of
approximately $395,000, expiring through 2008. These net operating loss
carry-forwards may result in future income tax benefits of approximately
$4,553,000; however, because realization is uncertain at this time, a valuation
reserve in the same amount has been established. Deferred income taxes reflect
the net tax effects of temporary differences between the carrying amounts of
assets and liabilities for financial reporting purposes and the amounts used for
income tax purposes.

A reconciliation of the provision (benefit) for income taxes with the amounts
determined by applying the U.S. federal income tax rate to income before income
taxes is as follows:



                                       12
<PAGE>


                                                         Year Ended January 31
                                                          2007          2006
                                                     ---------------------------
Computed at the federal statutory rate of 34%           $ (448,000)  $ (538,000)
State tax (benefit) at statutory rates                     (59,000)     (95,000)
Change in valuation allowance                               507,000      633,000
                                                     ---------------------------
Income tax expense                                          $     -      $     -

Significant components of the Company's deferred tax liabilities and assets are
as follows:

                                                          As of January 31
                                                          2007          2006
                                                     ---------------------------
Deferred tax liabilities - timing in full cost pool     $ (404,000)  $ (309,000)
Deferred tax assets - net operating losses                4,476,000    3,874,000
Valuation allowance for deferred tax assets             (4,072,000)  (3,565,000)
                                                     ---------------------------
Net deferred tax assets                                    $     -     $      -

The valuation allowance increased $507,000 and $633,000 for the years ending
January 31, 2007 and 2006, respectively.

The ability of the Company to utilize NOL carryforwards to reduce future federal
taxable income and federal income tax of the Company is subject to various
limitations under the Internal Revenue Code of 1986, as amended. The utilization
of such carryforwards may be limited upon the occurrence of certain ownership
changes, including the issuance or exercise of rights to acquire stock, the
purchase or sale of stock by 5% stockholders, as defined in the Treasury
regulations, and the offering of stock by the Company during any three-year
period resulting in an aggregate change of more than 50% in the beneficial
ownership of the Company.

10.  LONG-TERM DEBT

The Company has the following notes payable as of January 31, 2007

Note payable to a bank, secured by oil and gas
Properties, interest at Prime Rate plus 1 and 1/4 %,
(9.5% at January 31, 2007), monthly interest payments
starting November 5, 2005 and monthly principal
payments of $16,667 starting on February 5, 2006,
maturing July 5, 2008                                           $ 308,306

Note payable to a private equity fund, secured by oil
and gas properties, net of loan discount of $133,000,
variable monthly payments due starting on August 31,
2006 , maturing July 26, 2007                                     335,571
                                                                ---------
                                                                  643,877
                                                                ---------
          Less: Current Portion                                  (643,877)
                                                                ---------

                                                                $      --
                                                                =========


                                       13
<PAGE>

As of January 31, 2007 the Company was in default of the terms of the bank note
payable and accordingly the amounts due under this note payable have all been
classified as a current liability.

Maturities of long-term debt for the next five years ending January 31, are as
follows:

                  2008              $ 643,877
                  2009                      -
                  2010                      -
                  2011                      -
                  2012                      -
                  Thereafter                -
                                 ------------
                                    $ 643,877
                                 ============

11. EARNINGS PER SHARE

SFAS 128 requires a reconciliation of the numerator and denominator of the basic
and diluted earnings per share (EPS) computations. The warrants for 714,286
common shares were not included in the calculation of diluted earnings per share
because their effect was anti-dilutive.

The following reconciles the components of the EPS computation for the years
ended January 31, 2007 and 2006:

                                                     2007              2006
                                                     ----              ----
Basic (loss) per share computation Numerator:
  Net loss                                       $ (1,516,282)    $ (1,583,501)

Denominator:
  Weighted average common shares outstanding       63,129,982       52,513,509
Basic (loss) per share                           $      (0.02)    $      (0.03)

Diluted (loss) per share Numerator:
  Net loss                                       $ (1,516,282)    $ (1,583,501)

Denominator:
  Weighted average common shares outstanding       63,129,982       52,513,509
Diluted (loss) per share                         $      (0.02)    $      (0.03)

12. ASSET RETIREMENT OBLIGAITON

Effective June 1, 2003, the Company adopted SFAS 143, Accounting for Asset
Retirement Obligations. Upon adoption of SFAS 143, the Company recorded an asset
retirement obligation liability of $20,770 and an increase to net properties and
equipment of $20,770.


                                       14
<PAGE>



The following table provides a roll forward of the asset retirement obligations:

                                              Year Ended        Year Ended
                                           January 31, 2007   January 31, 2006

  Asset retirement obligation beginning
        balance                           $     96,756          $   86,799
    Liabilities incurred                            --               3,026
    Liabilities settled                             --                  --
    Accretion expense                            6,931               6,931
                                          -------------        ------------
  Asset retirement obligation
    ending balance                       $     103,687       $   96,756
                                           =============       ==========

13. OPTIONS AND WARRANTS

The Company has issued stock options and stock warrants as follows:

                     Outstanding   Granted   Exercised  Outstanding
         Exercise    January 31,     or         or       January 31,  Expiration
          Price         2006     (Cancelled)  Expired       2006         Date
         --------   -----------  ----------- ---------  ------------  ----------

Warrants  $ 0.50      714,286          --          --      714,286     10/01/07

14.  OPERATING LEASES

The Company currently has three operating leases. The Company leases a
compressor for the Laurel County Kentucky gathering system at $4,304 per month
through April 2006 and then becomes month to month thereafter. In addition, the
Company has two office equipment leases through April 2010. All leases are
warrantied with full maintenance.

Additionally, the minimum annual rental commitments as of January 31, 2007 under
noncancellable leases are as follows: 2008 - $5,375; 2009 - $3,779; 2010 -
$3,634; and 2011 - $909.

15.   MAJOR PURCHASERS

The Company's natural gas and oil production is sold under contracts with
various purchasers. Natural gas sales to one purchaser approximated 68% of total
natural gas and oil revenues for the year ended January 31, 2007.

See Note 8 regarding sales to Related Parties.

16.  FINANCIAL INSTRUMENTS

The carrying amount of cash, receivables, deposits, accounts payable, and
accrued expenses approximates fair value due to the short maturity of those
instruments. The carrying amounts of notes payable approximate fair value due to


                                       15
<PAGE>

the variable nature of the interest rates of the notes payable.

17.  CONTINGENCIES

In the normal course of its operations, the Company may, from time to time, be
named in legal actions seeking monetary damages. While the outcome of these
matters cannot be estimated with certainty, management does not expect, based
upon consultation with legal counsel, that they will have a material effect on
the Company's business or financial condition or results of operations.

18.  STOCK-BASED COMPENSATION

The Company has a stock compensation program under which some employees receive
a portion of their compensation in fully vested, marketable shares of the
Company's common stock. The number of shares issued is determined by the daily
average market price of the stock on a monthly basis. Compensation expense
recognized under this program for the years ended January 31, 2007 and 2006 were
$27,700 for 799,105 shares and $135,750 for 504,133 shares respectively.

19.  SFAS 69 SUPPLEMENTAL DISCLOSURES (UNAUDITED)

Net Capitalized Costs

The Company's aggregate capitalized costs related to natural gas and oil
producing activities are summarized as follows:

                                          January 31, 2007
Natural gas and oil properties   Held for    Held for                  January
and                                 use        sale        Total       31, 2006
                                 -----------------------------------------------
  Related lease equipment:
  Proved                         $5,202,576  $1,165,433   $6,368,009 $6,545,443
  Unproved                          144,483           -      144,483    144,483
  Pipeline facilities             1,028,101     652,304    1,680,405  1,481,585
                                 ---------- ----------- ------------  ---------
                                  6,375,160   1,817,737    8,192,897  8,171,511

Accumulated depreciation,
  depletion and impairment       (2,208,931)  (282,737)  (2,491,668) (1,697,867)
                                 ---------- ----------- ------------  ---------
  Net capitalized costs          $4,166,229  $1,535,000  $5, 701,229  $6,473,644
                                 ========== =========== ============  ==========

Unproved properties not subject to amortization consisted mainly of leasehold
acquired through acquisitions. The Company will continue to evaluate its
unproved properties; however, the timing of the ultimate evaluation and
disposition of the properties has not been determined.

                                       16
<PAGE>

Costs Incurred

Costs incurred in natural gas and oil property acquisition, exploration and
development activities that have been capitalized are summarized as follows:

                                             Years Ended January 31,
                                              2007             2006
                                              ----             ----

Acquisition of properties proved
 and unproved$                                     -     $ 1,000,000
Development costs                            219,167       1,044,420
Acquisition of pipelines                     124,293       1,151,208
                                      --------------     -----------
                                       $     343,460     $ 3,195,628
                                       =============     ===========

Results of Operations for Natural Gas and Oil Producing Activities

The Company's results of operations from natural gas and oil producing
activities are presented below for the fiscal years ended January 31, 2007 and
2006. The following table includes revenues and expenses associated directly
with the Company's natural gas and oil producing activities. It does not include
any interest costs and general and administrative costs and, therefore, is not
necessarily indicative of the contribution to consolidated net operating results
of the Company's natural gas and oil operations.

                                                 Years Ended January 31,
                                                   2007           2006
                                                   ----           ----

        Production revenues              $       630,529   $   1,183,118
        Production costs                        (432,407)       (517,534)
        Impairment of property                  (445,148)       (520,048)
        Depletion expense                       (273,184)       (432,593)
                                         ---------------     -----------
                                                (520,210)       (287,057)
        Imputed income tax provision (1)               -               -
                                         ---------------     -----------
        Results of operation for natural
         gas/oil producing activity       $     (520,210)    $  (287,057)
                                          ===============    ============

(1)  The imputed income tax provision is hypothetical (at the statutory rate)
     and determined without regard to the Company's deduction for general and
     administrative expenses, interest costs and other income tax credits and
     deductions, nor whether the hypothetical tax provision will be payable.

Natural Gas and Oil Reserve Quantities

The following schedule contains estimates of proved natural gas and oil reserves
attributable to the Company. Proved reserves are estimated quantities of natural
gas and oil 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 which are
expected to be recovered through existing wells with existing equipment and
operating methods. Reserves are stated in thousand cubic feet (mcf) of natural
gas and barrels (bbl) of oil. Geological and engineering estimates of proved


                                       17
<PAGE>

natural gas and oil reserves at one point in time are highly interpretive,
inherently imprecise and subject to ongoing revisions that may be substantial in
amount. Although every reasonable effort is made to ensure that the reserve
estimates are accurate, due to their nature reserve estimates are generally less
precise than other estimates presented in connection with financial statement
disclosures.

                                          Gas - mcf        Oil - bbls
                                        ---------------  ----------------
Proved reserves:
 Balance, January 31, 2005                 2,181,471         30,398
 Purchase of reserves-in-place                     -              -
 Improved recovery                                 -              -
 Extensions and discoveries                        -         13,744
 Revisions of previous estimates            (285,814)             -
 Production                                 (130,748)        (2,962)
                                        ---------------  ----------------
Balance, January 31, 2006                  1,764,909         41,180
                                        ---------------  ----------------
 Purchase of reserves-in-place
 Extensions and discoveries                        -
 Revisions of previous estimates             274,967        (17,620)
 Production                                 (97,836)         (1,417)
                                        ---------------  ----------------
     Balance, January 31, 2007            1,942,040          22,143
                                        ===============  ================
Proved developed reserves:
     Balance, January 31, 2006              875,876          33,959
     Balance, January 31, 2007              955,770          18,712

Standardized Measure of Discounted Future Net Cash Flows:

The following schedule presents the standardized measure of estimated discounted
future net cash flows from the Company's proved reserves for the fiscal years
ended January 31, 2007 and 2006. Estimated future cash flows are based on
independent reserve data. Because the standardized measure of future net cash
flows was prepared using the prevailing economic conditions existing at January
31, 2007 and 2006, it should be emphasized that such conditions continually
change. Accordingly, such information should not serve as a basis in making any
judgment on the potential value of the Company's recoverable reserves or in
estimating future results of operations.

                                             Years Ended January 31,
                                              2007           2006
                                              ----           ----

Future production revenues (1)            $13,464,890    $15,629,436
Future production costs                    (3,847,860)    (4,468,354)
Future development costs                     (789,000)    (1,535,000)
                                        ------------- ----------------
Future cash flows before income taxes       8,828,030      9,626,082
Future income tax                          (1,444,646)    (1,398,751)
                                         ------------   ------------
Future net cash flows                       7,383,384      8,227,331
Effect of discounting future annual
    cash flows at 10%                      (2,966,724)    (3,235,272)
                                         ------------   ------------
Standardized measure of discounted
    net cash flows                       $  4,416,660   $  4,992,059
                                         ============   ============

                                       18
<PAGE>

(1)  The weighted average natural gas and oil wellhead prices used in computing
     the Company's reserves were $6.06 per mcf and $47.82 per bbl at January 31,
     2007 as compared to $7.84 per mcf and $55.80 per bbl at January 31, 2006.

The following schedule contains a comparison of the standardized measure of
discounted future net cash flows to the net carrying value of proved natural gas
and oil properties at January 31, 2007 and 2006:

                                                  Years Ended January 31,
                                                   2006             2006
                                                   ----             ----
Standardized measure of discounted future
     net cash flows                             $ 4,416,660    $ 4,992,059
Proved natural gas & oil property net of
     Accumulated depreciation, depletion and
     amortization, including impairment of
     $765,196                                     4,416,660      4,992,059
                                                ------------   ------------
Standardized measure of discounted future
    net cash flows in excess of net carrying
    value of proved natural gas & oil properties $        -     $        -
                                                =============  ============


                                       19
<PAGE>







                                   SIGNATURES

      In accordance with Section 13 or 15(a) of the Exchange Act, the Registrant
has caused this Report to be signed on its behalf by the undersigned, thereunto
duly authorized on the 19th day of June 2007.

                             ENERGAS RESOURCES, INC.


                                  By:  /s/ George G. Shaw
                                       --------------------------------------
                                       George G. Shaw, President, Principal
                                       Accounting Officer and Principal
                                       Financial Officer


      In accordance with the Exchange Act, this Report has been signed by the
following persons on behalf of the Registrant in the capacities and on the dates
indicated.

                                     Title                    Date

/s/ George G. Shaw
------------------------
George G. Shaw                      Director             June 19, 2007



/s/ G. Scott Shaw
------------------------
G. Scott Shaw                       Director             June 19, 2007








<PAGE>




                             ENERGAS RESOURCES, INC.

                                   FORM 10-KSB

                                    EXHIBITS


<PAGE>