**FORM        10-QSB**

|         x | QUARTERLY                  REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE                  ACT OF                  1934 |
|---------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------|

|         o       | TRANSITION                  REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE                  ACT OF                  1934 |
|---------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------|

**Forster        Drilling Corporation**

**APPLICABLE        ONLY TO ISSUERS INVOLVED IN BANKRUPTCY**

**PROCEEDINGS        DURING THE PRECEDING FIVE YEARS**

**APPLICABLE        ONLY TO CORPORATE ISSUERS**

----

**Forster        Drilling Corporation**

**INDEX**

|                         |                     |                                                                                                                                                                                                                                                             | **Page                  No.** |
|------------------------------|--------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------|
| **Part                  I**  |                     | Financial                  Information                                                                                                                                                                                                                           |                          |
|                         |                     |                                                                                                                                                                                                                                                             |                          |
|                         | Item                  1. | Condensed                  Consolidated Financial Statements of Forster Drilling                  Corporation                                                                                                                                                    | 1                             |
|                         |                     |                                                                                                                                                                                                                                                             |                          |
|                         |                     | Condensed                  Consolidated Balance Sheet dated May 31, 2007 (Unaudited)                                                                                                                                                                             | 2                             |
|                         |                     |                                                                                                                                                                                                                                                             |                          |
|                         |                     | Condensed                  Consolidated Statements of Operations for the Three Months Ended                  May 31,                  2007 and 2006 (Unaudited) and for the Six Months Ended May 31,                  2007 and                  2006 (Unaudited) | 3                             |
|                         |                     |  Condensed                  Consolidated Statements of Stockholders’ Equity for the Three Months Ended                  May 31, 2007 (Unaudited)                                                                                                      |  4                       |
|                         |                     | Condensed                  Consolidated Statements of Cash Flows for the Six Months Ended                  May 31,                  2007 and 2006 (Unaudited)                                                                                                    | 5                             |
|                         |                     |                                                                                                                                                                                                                                                             |                          |
|                         |                     | Notes                  to Consolidated Financial Statements (Unaudited)                                                                                                                                                                                          | 6                             |
|                         |                     |                                                                                                                                                                                                                                                             |                          |
|                         | Item                  2. | Management’s                  Discussion and Analysis                                                                                                                                                                                                      | 10                            |
|                         |                     |                                                                                                                                                                                                                                                             |                          |
|                         | Item                  3. | Controls                  and Procedures                                                                                                                                                                                                                         | 14                            |
|                         |                     |                                                                                                                                                                                                                                                             |                          |
| **Part                  II** |                     | Other                  Information                                                                                                                                                                                                                               | 14                            |
|                         |                     |                                                                                                                                                                                                                                                             |                          |
|                         | Item                  1. | Legal                  Proceedings                                                                                                                                                                                                                               | 14                            |
|                         |                     |                                                                                                                                                                                                                                                             |                          |
|                         | Item                  2. | Unregistered                  Sales of Equity Securities and Use of Proceeds                                                                                                                                                                                     | 15                            |
|                         |                     |                                                                                                                                                                                                                                                             |                          |
|                         | Item                  3. | Defaults                  Upon Senior Securities                                                                                                                                                                                                                 | 15                            |
|                         |                     |                                                                                                                                                                                                                                                             |                          |
|                         | Item                  4. | Submission                  of Matters to a Vote of Security Holders                                                                                                                                                                                             | 15                            |
|                         |                     |                                                                                                                                                                                                                                                             |                          |
|                         | Item                  5. | Other                  Information.                                                                                                                                                                                                                              | 15                            |
|                         |                     |                                                                                                                                                                                                                                                             |                          |
|                         | Item                  6. | Exhibits                  and Reports on Form 8-K                                                                                                                                                                                                                | 15                            |
|                         |                     |                                                                                                                                                                                                                                                             |                          |
|                         |                     | Signatures                                                                                                                                                                                                                                                       | 16                            |

----

**PART        I**

**ITEM        1.**
**FINANCIAL        STATEMENTS**

----

**FORSTER        DRILLING CORPORATION**

**CONSOLIDATED        BALANCE SHEET**

**(Unaudited)**

|                                                                                                                                         |   | May                  31, |       |
|----------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------|------------|
| **ASSETS**                                                                                                                                   |   | 2007                     |       |
|                                                                                                                                         |   |                     |       |
| Current                  assets:                                                                                                             |   |                     |       |
| Cash                  and cash equivalents                                                                                                   |   | $                        | -          |   |
| Trade                  accounts receivable, net                                                                                              |   |                     | 775,140    |   |
| Prepaid                  insurance and other                                                                                                 |   |                     | 121,354    |   |
|                                                                                                                                         |   |                     |       |   |
| Total                  current assets                                                                                                        |   |                     | 896,494    |   |
|                                                                                                                                         |   |                     |       |   |
| Land                                                                                                                                         |   |                     | 180,335    |   |
| Building                                                                                                                                     |   |                     | 323,665    |   |
| Drilling                  rigs and related equipment                                                                                         |   |                     | 6,019,735  |   |
| Transportation,                  office and other equipment                                                                                  |   |                     | 177,187    |   |
| Construction                  in progress: drilling rigs and related equipment                                                               |   |                     | 4,648,920  |   |
| Total                  fixed assets                                                                                                          |   |                     | 11,349,842 |   |
| Accumulated                  depreciation                                                                                                    |   |                     | (350,189   | ) |
| Net                  fixed assets                                                                                                            |   |                     | 10,999,653 |   |
|                                                                                                                                         |   |                     |       |   |
| Other                  assets                                                                                                                |   |                     | 105,364    |   |
|                                                                                                                                         |   |                     |       |   |
| Total                  assets                                                                                                                |   | $                        | 12,001,511 |   |
|                                                                                                                                         |   |                     |       |   |
| **LIABILITIES                  AND STOCKHOLDERS’ EQUITY**                                                                              |   |                     |       |   |
|                                                                                                                                         |   |                     |       |   |
| Current                  liabilities:                                                                                                        |   |                     |       |   |
| Notes                  payable, net of unamortized discount                                                                                  |   | $                        | 1,536,339  |   |
| Notes                  payable to related parties                                                                                            |   |                     | 606,412    |   |
| Current                  portion of long-term debt                                                                                           |   |                     | 774,047    |   |
| Accounts                  payable, including cash overdraft of $216,773                                                                      |   |                     | 2,232,848  |   |
| Wages                  payable                                                                                                               |   |                     | 153,725    |   |
| Taxes                  payable                                                                                                               |   |                     | 608,339    |   |
| Accrued                  liabilities                                                                                                         |   |                     | 235,201    |   |
| Deferred                  revenue                                                                                                            |   |                     | 676,342    |   |
| Advances                  from stockholders                                                                                                  |   |                     | 178,490    |   |
| Other                  current liabilities                                                                                                   |   |                     | -          |   |
| Total                  current liabilities                                                                                                   |   |                     | 7,001,743  |   |
|                                                                                                                                         |   |                     |       |   |
| Long                  term debt, net of current maturities                                                                                   |   |                     | 1,585,743  |   |
|                                                                                                                                         |   |                     |       |   |
| Total                  liabilities                                                                                                           |   |                     | 8,587,486  |   |
|                                                                                                                                         |   |                     |       |   |
| Stockholders’                  equity:                                                                                                 |   |                     |       |   |
| Preferred                  stock, $0.25 par value per share, 12,500,000                  shares authorized, 5,831 issued and outstanding     |   |                     | 1,459      |   |
| Common                  stock, $0.002 par value per share, 100,000,000                  shares authorized, 45,296,790 issued and outstanding |   |                     | 90,594     |   |
| Additional                  paid-in capital                                                                                                  |   |                     | 12,129,343 |   |
| Accumulated                  deficit                                                                                                         |   |                     | (8,807,371 | ) |
| Total                  stockholders’ equity                                                                                            |   |                     | 3,414,025  |   |
| Total                  liabilities and stockholders’ equity                                                                            |   | $                        | 12,001,511 |   |

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

----

**FORSTER        DRILLING CORPORATION **

**CONSOLIDATED        STATEMENTS OF OPERATIONS **

**Three        Months Ended May 31, 2007 and 2006**

**Six        Months Ended May 31, 2007 and 2006**

**(Unaudited)**

|                                                           |   | Three                    Months EndedMay                    31, 2007 |       | Three                    Months EndedMay                    31, 2006 (Predecessor) |    | Six                    Months Ended                    May                    31, 2007 |    | Six                    Months Ended May                    31, 2006 (Predecessor) |       |
|----------------------------------------------------------------|--------|----------------------------------------------------------------------|------------|------------------------------------------------------------------------------------|---------|---------------------------------------------------------------------------------------------|---------|-----------------------------------------------------------------------------------|------------|
| REVENUES:                                                      |   |                                                                 |       |                                                                               |    |                                                                                        |    |                                                                              |       |
| Contract                    drilling revenues                  | $      | $2,023,097                                                           |  $    | -                                                                                  |  $ | 3,453,977                                                                                   |  $ | -                                                                                 |       |
| Sales                    of rigs and component parts           |   | -                                                                    |       | -                                                                                  |    | -                                                                                           |    | 266,000                                                                           |       |
| Total                    Revenues                              |   | 2,023,097                                                            |       | -                                                                                  |    | 3,453,977                                                                                   |    | 266,000                                                                           |       |
|                                                           |   |                                                                 |       |                                                                               |    |                                                                                        |    |                                                                              |       |
| COST                    OF SALES:                              |   |                                                                 |       |                                                                               |    |                                                                                        |    |                                                                              |       |
| Contract                    drilling revenues                  |   |                                                                 | 1,302,252  |                                                                               |    | -                                                                                           |    |                                                                              | 2,085,214  |   |   | - |   |
| Sale                    of rigs and component parts            |   |                                                                 | -          |                                                                               |    | -                                                                                           |    |                                                                              | -          |   |   | 112,000 |   |
| Total                    cost of sales                         |   |                                                                 | 1,302,252  |                                                                               |    | -                                                                                           |    |                                                                              | 2,085,214  |   |   | 112,000 |   |
|                                                           |   |                                                                 |       |                                                                               |    |                                                                                        |    |                                                                              |       |   |   |   |   |
| GROSS                    PROFIT                                |   |                                                                 | 720,845    |                                                                               |    | -                                                                                           |    |                                                                              | 1,368,763  |   |   | 154,000 |   |
|                                                           |   |                                                                 |       |                                                                               |    |                                                                                        |    |                                                                              |       |   |   |   |   |
| Operating                    expenses:                         |   |                                                                 |       |                                                                               |    |                                                                                        |    |                                                                              |       |   |   |   |   |
| Rig                    refurbishment and related expenses      |   |                                                                 | 145,357    |                                                                               |    | 98,322                                                                                      |    |                                                                              | 197,240    |   |   | 228,007 |   |
| Depreciation                    and amortization expense       |   |                                                                 | 144,329    |                                                                               |    | 2,810                                                                                       |    |                                                                              | 278,065    |   |   | 5,600 |   |
| Taxes                                                          |   |                                                                 | 7,709      |                                                                               |    | -                                                                                           |    |                                                                              | 15,418     |   |   | - |   |
| Consulting                    and professional fees            |   |                                                                 | 471,705    |                                                                               |    | -                                                                                           |    |                                                                              | 906,462    |   |   | - |   |
| Salaries                    and wages                          |   |                                                                 | 88,961     |                                                                               |    | -                                                                                           |    |                                                                              | 88,961     |   |   | - |   |
| Other                    general and administrative expenses   |   |                                                                 | 184,557    |                                                                               |    | 589,607                                                                                     |    |                                                                              | 599,224    |   |   | 816,384 |   |
| Total                    operating expenses                    |   |                                                                 | 1,042,618  |                                                                               |    | 690,739                                                                                     |    |                                                                              | 2,085,370  |   |   | 1,049,991 |   |
|                                                           |   |                                                                 |       |                                                                               |    |                                                                                        |    |                                                                              |       |   |   |   |   |
| OPERATING                    LOSS                              |   |                                                                 | (321,773   | )                                                                                  |    | (690,739                                                                                    | )       |                                                                              | (716,607   | ) |   | (895,991 | ) |
|                                                           |   |                                                                 |       |                                                                               |    |                                                                                        |    |                                                                              |       |   |   |   |   |
| Other                    expenses:                             |   |                                                                 |       |                                                                               |    |                                                                                        |    |                                                                              |       |   |   |   |   |
| Cost                    of reverse merger                      |   |                                                                 | -          |                                                                               |    | -                                                                                           |    |                                                                              | -          |   |   | - |   |
| Loss                    on settlement of debt                  |   |                                                                 | -          |                                                                               |    | -                                                                                           |    |                                                                              | -          |   |   | - |   |
| Other                    expenses                              |   |                                                                 | 6,779      |                                                                               |    | -                                                                                           |    |                                                                              | 8,879      |   |   | - |   |
| Interest                    expense                            |   |                                                                 | 631,790    |                                                                               |    | 38,715                                                                                      |    |                                                                              | 1,073,099  |   |   | 59,272 |   |
|                                                           |   |                                                                 |       |                                                                               |    |                                                                                        |    |                                                                              |       |   |   |   |   |
| LOSS                                                           |   | $                                                                    | (960,342   | )                                                                                  | $       | (729,454                                                                                    | )       | $                                                                                 | (1,798,585 | ) | $ | (955,263 | ) |
|                                                           |   |                                                                 |       |                                                                               |    |                                                                                        |    |                                                                              |       |   |   |   |   |
| Basic                    and diluted net loss per share        |   | $                                                                    | (0.02      | )                                                                                  | $       | (0.02                                                                                       | )       | $                                                                                 | (0.04      | ) | $ | (0.02 | ) |
|                                                           |   |                                                                 |       |                                                                               |    |                                                                                        |    |                                                                              |       |   |   |   |   |
| Weighted                    average commons shares outstanding |   |                                                                 | 44,679,948 |                                                                               |    | 38,412,883                                                                                  |    |                                                                              | 44,679,948 |   |   | 38,412,883 |   |
|                                                           |   |                                                                 |       |                                                                               |    |                                                                                        |    |                                                                              |       |   |   |   |   |

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

----

**FORSTER        DRILLING CORPORATION **

**CONSOLIDATED        STATEMENTS OF STOCKHOLDERS’ EQUITY **

**November        30, 2006 through May 31, 2007**

**(Unaudited)**

|                                                  | **Preferred                  Stock** | **Common                  Stock** | **Additional****Paid-In** |        |            |
|-------------------------------------------------------|--------------------------------------|-----------------------------------|---------------------------|-------------|-----------------|
|                                                  | **Shares**                           | **Par**                           | **Shares**                | **Par**     | **Capital**     | **Accumulated                  Deficit** | **Total** |
|                                                  |                                 |                              |                      |        |            |   |   |
| **Balance                  November 30, 2006**        | **5,831**                            | **$1,459**                        | **44,228,525**            | **$88,458** | **$10,246,581** | **$(7,008,786)** | **$3,327,712** |
|                                                  |                                 |                              |                      |        |            |   |   |
| **Shares                  issued for services**       | **-**                                | **-**                             | **75,000**                | **150**     | **145,900**     | **-** | **146,050** |
| **Shares                  issued with new loans**     | **-**                                | **-**                             | **824,400**               | **1,648**   | **1,563,016**   | **-** | **1,564,664** |
| **Shares                  issued for converted debt** | **-**                                | **-**                             | **168,865**               | **338**     | **165,525**     | **-** | **165,863** |
| **Warrants**                                          | **-**                                | **-**                             | **-**                     | **-**       | **8,321**       | **-** | **8,321** |
| **Net                  loss**                         | **-**                                | **-**                             | **-**                     | **-**       | **-**           | **(1,798,585)** | **(1,798,585)** |
|                                                  |                                 |                              |                      |        |            |   |   |
| **Balance                  May 31, 2007**             | **5,831**                            | **$1,459**                        | **45,296,790**            | **$90,594** | **$12,129,343** | **$(8,807,371)** | **$3,414,025** |

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

----

**FORSTER        DRILLING CORPORATION **

**CONSOLIDATED        STATEMENTS OF CASH FLOWS **

**Six        Months Ended May 31, 2007 and 2006**

**(Unaudited)**

|                                                                                         |   | Six                  Months Ended May 31, 2007 |       | Six                  Months Ended May 31, 2006 |   |
|----------------------------------------------------------------------------------------------|--------|------------------------------------------------|------------|------------------------------------------------|--------|
|                                                                                         |   |                                           |       | (Predecessor)                                  |   |
| **Cash                  flows from operating activities:**                                   |   |                                           |       |                                           |   |
| Net                  loss                                                                    |   | $                                              | (1,798,585 | )                                              | $      | (955,263 | ) |
| Adjustments                  to reconcile net loss to net cash used in operating activities: |   |                                           | -          |                                           |   | - |   |
| Stock-based                  compensation expense                                            |   |                                           | 146,050    |                                           |   | 215,114 |   |
| Amortization                  of beneficial conversion feature                               |   |                                           | 405,096    |                                           |   | - |   |
| Amortization                  of debt discount                                               |   |                                           | 463,668    |                                           |   | 21,836 |   |
| Depreciation                                                                                 |   |                                           | 278,065    |                                           |   | 5,600 |   |
| Interest                  paid with common stock                                             |   |                                           | 3,770      |                                           |   | - |   |
| (Increase)                  decrease in accounts receivable                                  |   |                                           | (575,140   | )                                              |   | 13,411 |   |
| Decrease                  in inventories                                                     |   |                                           | -          |                                           |   | 112,770 |   |
| (Increase)                  decrease in prepaids                                             |   |                                           | 207,361    |                                           |   | (13,500 | ) |
| Increase                  in other assets                                                    |   |                                           | (16,516    | )                                              |   | - |   |
| Increase                  in accounts payable                                                |   |                                           | 1,243,176  |                                           |   | 106,564 |   |
| Increase                  in due to shareholders                                             |   |                                           | -          |                                           |   | - |   |
| Decrease                  in deferred revenue                                                |   |                                           | (137,876)  |                                           |   | - |   |
| Increase                  in accrued expenses & other liabilities                        |   |                                           | 480,101    |                                           |   | 87,138 |   |
| Settlement                  of payable with issuance of stock                                |   |                                           | 7,092      |                                           |   | - |   |
| Non                  cash warrants                                                           |   |                                           | 8,321      |                                           |   | - |   |
| Net                  cash provided from operating activities                                 |   |                                           | 714,583    |                                           |   | (406,330 | ) |
|                                                                                         |   |                                           |       |                                           |   |   |   |
| **Cash                  flows from investing activities:**                                   |   |                                           | -          |                                           |   | - |   |
| Purchases                  of fixed assets                                                   |   |                                           | (4,545,733 | )                                              |   | (2,570,381 | ) |
| Net                  cash used in investing activities                                       |   |                                           | (4,545,733 | )                                              |   | (2,570,381 | ) |
|                                                                                         |   |                                           |       |                                           |   |   |   |
| **Cash                  flows from financing activities:**                                   |   |                                           |       |                                           |   |   |   |
| Proceeds                  from sale of common stock                                          |   |                                           | -          |                                           |   | 2,250,869 |   |
| Proceeds                  from related party borrowings                                      |   |                                           | 25,000     |                                           |   | 123,082 |   |
| Proceeds                  from third party borrowings                                        |   |                                           | 4,384,750  |                                           |   | 926,000 |   |
| Advances                  from customers                                                     |   |                                           | 480,000    |                                           |   | - |   |
| Advances                  from related parties                                               |   |                                           | 160,550    |                                           |   | - |   |
| Payments                  on related party borrowings                                        |   |                                           | (60,000    | )                                              |   | (53,232 | ) |
| Payments                  on third party borrowings                                          |   |                                           | (1,183,429 | )                                              |   | (85,942 | ) |
| Net                  cash provided by financing activities                                   |   |                                           | 3,806,871  |                                           |   | 3,160,777 |   |
|                                                                                         |   |                                           |       |                                           |   |   |   |
| Increase                  (decrease) in cash and cash equivalents                            |   |                                           | (24,279    | )                                              |   | 184,066 |   |
| Cash                  and cash equivalents, beginning of period                              |   |                                           | 24,279     |                                           |   | - |   |
| Cash                  and cash equivalents, end of period                                    |   | $                                              | -          |                                           | $      | 184,066 |   |
|                                                                                         |   |                                           |       |                                           |   |
| **Supplemental                  Cash Flow Disclosures:**                                     |   |                                           |       |                                           |   |
| Cash                  paid for income taxes                                                  |   | $                                              | -          |                                           | $      | - |   |
| Cash                  paid for interest                                                      |   |                                           | 89,293     |                                           |   | - |   |
| **Non-cash                  investing and financing activities:**                            |   |                                           |       |                                           |   |   |   |
| Paid                  debt with common stock                                                 |   |                                           | 805,500    |                                           |   | 627,000 |   |
| Purchased                  drilling rig parts with note payable to seller                    |   |                                           | 58,750     |                                           |   | 400,000 |   |
| Purchased                  drilling rig parts with accounts payable                          |   |                                           | -          |                                           |   | 227,000 |   |
| Discount                  on notes payable                                                   |   |                                           | 703,480    |                                           |   | - |   |
| Discount                  of notes for beneficial conversion feature                         |   |                                           | 613,075    |                                           |   | 10,918 |   |

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

----

**FORSTER        DRILLING CORPORATION**

**NOTE        1 - BASIS OF PRESENTATION **

Forster        Drilling Corporation (“Forster”) have been prepared in accordance with        accounting principles generally accepted in the United States of America        and the        rules of the Securities and Exchange Commission, and should be read in        conjunction with the audited consolidated financial statements and notes        thereto        contained in the Form 10-KSB        filed on March 15, 2007 and incorporated herein by reference. In the opinion        of        management, all adjustments, consisting of normal recurring adjustments,        necessary for a fair presentation of financial position and the results of        operations for the interim periods presented have been reflected herein.        The        results of operations for interim periods are not necessarily indicative        of the        results to be expected for the full year. Notes to the financial statements        which would substantially duplicate the disclosures contained in the audited        financial statements for fiscal 2006 as reported in the Form 10-KSB have        been        omitted. 

**NOTE        2 - GOING CONCERN**

**NOTE        3 - NOTES PAYABLE AND NOTES PAYABLE TO RELATED PARTIES **

|                                                                                                                                |   |   |                 |   |
|-------------------------------------------------------------------------------------------------------------------------------------|--------|--------|----------------------|--------|
| Proceeds                                                                                                                            |   | $      | 1,936,000            |   |
|   Less:                  discount for common stock                                                                        |   |   | (824,974             | )      |
|             discount                  for beneficial conversion feature |   |   | (682,549             | )      |
|              repayment                  of principal               |   |   | (0                   | )      |
|   Add:                  amortization of discount                                                                          |   |   | 494,721              |   |
|   Balance                  at May 31, 2007                                                                                |   |   | 923,198              |   |
|   Less:                  related party portion                                                                            |   |   | (                  - | )      |
|   Third                  party portion at May 31, 2007                                                                    |   | $      | 923,198              |   |

----

|                                                                                                                                |   |   |     |   |
|-------------------------------------------------------------------------------------------------------------------------------------|--------|--------|----------|--------|
| Proceeds                                                                                                                            |   | $      | 715,000  |   |
|   Less:                  discount for common stock                                                                        |   |   | (327,168 | )      |
|             discount                  for beneficial conversion feature |   |   | (387,832 | )      |
|              repayment                  of principal               |   |   | (15,000  | )      |
|   Add:                  amortization of discount                                                                          |   |   | 430,818  |   |
|     Balance                  at May 31, 2007                                                                    |   | $      | 415,818  |   |
|   Less:                  related party portion                                                                            |   |   | (50,000  | )      |
|   Third                  party portion at May 31, 2007                                                                    |   | $      | 365,818  |   |

----

**NOTE        4 -**
**        LONG TERM DEBT **

| Note                    Payable to Independence Bank, collateralized by company vehicle,                    incurs                    interest at an annual rateof                    8.5% and will mature on July 28, 2009, due in 36 monthly payments                    of                    approximately $935.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |  $                    23,584  |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------|
| Note                    Payable to Daimler Chrysler, collateralized by company vehicle,                    incurs                    interest at an annual rate of 8.7%                    and will mature on June 6, 2011, due in 60 monthly payments of                    approximately                    $697                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  29,626                       |
| Note                    Payable to Sterling Bank, collateralized by drilling rig #41,incurs                    interest at an annual rate of Wall Street                    Prime plus one percentage                    point (currently 9.25%) and will mature on February 16, 2010                    due in 36                    monthly                    payments of approximately $8,316 including interest                                                                                                                                                                                                                                                                                                                                                                                                                  |   247,415                |
| Note                    Payable to Ridgeway Petroleum Corporation, unsecured, incursan                    annual interest rate of 6% and is due and payable on February                    14,                    2009                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |  58,750                       |
| Note                    Payable to Sterling Bank, secured by a first lien deed of trust                    on                     Odessa                    real property, incurs interest                    at an annual rate of prime plus 1%  and                    will mature on October 11, 2011, due in 59 monthlypayments                    of approximately                    $1,333 plus interest and one balloon payment of $161,353 plus                    any unpaid                    accrued                    interest upon maturity                                                                                                                                                                                                                                                                 |   232,000                |
| Note                    Payable to Sterling Bank, collateralized by two CAT engines on                    Rig #12,                    incurs interest at an annual                    rate of Wall Street Prime plus 3 percentage points (currently                    $11.25%) and                    will mature on December                    9, 2009, due in 32 annul installments of approximately $8,373                    including                    interest                                                                                                                                                                                                                                                                                                                                                              |   230,000                |
|  Note                  Payable to Independence Bank, collateralized by rigs and rig parts                  and an                  assignment of any customer contract on the drilling rigs, incurs                  interest                  at a rate of Wall Street prime plus 3 percentage points (currently                  11.25%)                  and will mature on December 15, 2009, due in 36 monthly payments                  of                  approximately $10,208 plus interest when the entire remaining unpaid                  balance is then                  due                                       |   1,538,415              |
| Total                    notes payable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | 2,359,790                               |
|  Less                    current installments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  (774,047)                         |
|  Long-term                    debt                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |  $                    1,585,743    |

----

| May                    31, 2008        | $                    774,047                        |
|----------------------------------------|-----------------------------------------------------|
| 2009                                   | 796,253                                             |
| 2010                                   | 595,598                                             |
| 2011                                   | 23,804                                              |
| 2012                                   | 170,088                                             |
| 2013                    and thereafter |                          - |
|               |  $2,359,790                                    |

**NOTE        5 - STOCKHOLDERS EQUITY **

| · | 75,000                  shares resulting in a charge to the income statement of                  $146,050. |
|--------|------------------------------------------------------------------------------------------------------------|

| · | Issued                  convertible notes requiring 824,400 shares and beneficial conversion                  features totaling $1,564,664 resulting in a charge to additional                  paid in                  capital. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| · | 168,865                  shares in payment of outstanding debt and related                  interest.                                                                                                                             |

**NOTE        6-COMMITMENTS AND CONTINGENCIES**

**.**

**NOTE**
**7**
**        - CONCENTRATIONS**

----

**NOTE        8 - RELATED PATY TRANSACTIONS**

**NOTE        9 - SUBSEQUENT EVENTS **

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

**Forward        Looking Statements**

----

**Overview**

**Recent        Transactions**

**Results        of Operations**

----

**Liquidity**

*Historical        Financial Data*

*Credit        Facilities and Outstanding Debt*

*Need        for Additional Capital*

**Contractual        Commitments**

|   | Payments                  due by period |
|--------|-----------------------------------------|
|   | Less                  than 1 year       | 1                  -                  3 Years | 3                  -                  5 Years | More                  than 5 Years |

| Credit                  Facilities..........................  | $3,301,297 | $1,450,601 | $193,892 | - |
|----------------------------------------------------------------------------------------------------|------------|------------|----------|---|

| Operating                  Leases........................  | (1) | - | - | - |
|---------------------------------------------------------------------------------------------|-----|---|---|---|

| Employment                  and consulting contracts ......................  | $                  404,000 | $163,750 | - | - |
|-----------------------------------------------------------------------------------------------------------|----------------------------|----------|---|---|

| Total................................  | $3,705,297 | $1,614,351 | $193,892 | - |
|---------------------------------------------------------------------------------|------------|------------|----------|---|

----

**Off-Balance        Sheet Arrangements**

**Critical        Accounting Policies**

*Use        of Estimates in Financial Statement Preparation.*

**         **

*Property        and Equipment.*

*Revenue        Recognition*

*Basic        and Diluted Net Loss Per Common Share. *

*Share-Based        Payments.*

**Newly        Issued Accounting Pronouncements. **

** **

----

**ITEM        3. **
**CONTROLS        AND PROCEDURES.**

**Evaluation        of Disclosure Controls and Procedures**

**Changes        in Internal Control Over Financial Reporting**

----

**PART        II**

**ITEM        1. **
**LEGAL        PROCEEDINGS.**

**ITEM        2. **
**UNREGISTERED        SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.**

**ITEM        3.**
**DEFAULTS        UPON SENIOR SECURITIES.**

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

**ITEM        5. **
**OTHER        INFORMATION.**

**ITEM        6. **
**EXHIBITS        AND REPORTS ON FORM 8-K.**

**Exhibit        No.      **
**Identification        of Exhibit**

|  31.1  |         Certification                    Pursuant to Section                    302 of the Sarbanes-Oxley Act provided by F. E. Forster, III,                    Chief                    Executive Officer  |
|------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  31.2  |          Certification                    Pursuant to Section 302 of the Sarbanes-Oxley Act provided by                    Bud Najvar,                    Chief Financial Officer  |
|------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  32.1   |          Certification                    Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section                    906 of                    the Sarbanes-Oxley Act of 2002 provided by F. E. Forster, III,                    Chief        Executive                    Officer |
|------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  32.2  |          Certification                    Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section                    906 of                    the Sarbanes-Oxley Act of 2002 provided by Bud Najvar, Chief                    Financial        Officer  |
|------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**SIGNATURES**

**FORSTER        DRILLING CORPORATION**

----

**EXHIBIT        INDEX**

**Exhibit        No.**
**Identification        of Exhibit**

|  31.1  |         Certification                    Pursuant to Section                    302 of the Sarbanes-Oxley Act provided by F. E. Forster, III,                    Chief                    Executive Officer  |
|------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  31.2  |          Certification                    Pursuant to Section 302 of the Sarbanes-Oxley Act provided by                    Bud Najvar,                    Chief Financial Officer  |
|------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  32.1   |          Certification                    Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section                    906 of                    the Sarbanes-Oxley Act of 2002 provided by F. E. Forster, III,                    Chief        Executive                    Officer |
|------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  32.2  |          Certification                    Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section                    906 of                    the Sarbanes-Oxley Act of 2002 provided by Bud Najvar, Chief                    Financial        Officer  |
|------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|