---

UNITED STATESSECURITIES
AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 10-Q

[X] Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

For the quarterly period ended March 31, 2008

or

[   ] Transition Report Pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934

For the transition period from _____ to _____

Commission File Number: 000-51712

PARK PLACE ENERGY CORP.(Exact name of registrant as specified in its charter)

|Nevada                                               | 71-0971567                     
|---------------------------------------------------- | -------------------------------
|(State or other jurisdiction of                      | (I.R.S. Employer Identification
|incorporation or organization)                       | No.)                           
|                                                     |                                
|Suite 300, 840-6th Avenue S.W.                       |                                
|Calgary, Alberta, Canada                             | T2P 3E5                        
|(Address of principal executive offices)             | (Zip Code)                     
|                                                     |                                
|(403) 260-5375                                       |                                
|(Registrants telephone number, including area code) |                                

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

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

|Large accelerated filer [   ]                                                      | Accelerated filer [   ]      
|---------------------------------------------------------------------------------- | -----------------------------
|                                                                                   |                              
|Non-accelerated filer   [ 
       ]  (Do not check if a smaller reporting company) | Smaller reporting company [X]

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

Indicate the number of shares outstanding of each of the
issuers classes of common stock, as of the latest 
  practicable date. 57,865,335 shares of common stock outstanding as of
  May 13, 2008.

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PARK PLACE ENERGY CORP.

Quarterly Report On Form 10-QFor The Quarterly
Period Ended March 31, 2008

FORWARD-LOOKING STATEMENTS

This Form 10-Q for the quarterly period ended March 31, 2008
contains forward-looking statements that involve risks and uncertainties.
Forward-looking statements in this document include, among others, statements
regarding our capital needs, business plans and expectations. Such
forward-looking statements involve assumptions, risks and uncertainties
regarding, among others, the success of our business plan, availability of
funds, government regulations, operating costs, our ability to achieve
significant revenues, our business model and other factors. Any statements
contained herein that are not statements of historical fact may be deemed to be
forward-looking statements. In some cases, you can identify forward-looking
statements by terminology such as may, will, should, expect, plan,
intend, anticipate, believe, estimate, predict, potential or
continue, the negative of such terms or other comparable terminology. In
evaluating these statements, you should consider various factors, including the
assumptions, risks and uncertainties set forth in our Annual Report on Form
10-KSB for the year ended December 31, 2007 and other reports and documents we
have filed with or furnished to the Securities and Exchange Commission. These
factors or any of them may cause our actual results to differ materially from
any forward-looking statement made in this document. While these forward-looking
statements, and any assumptions upon which they are based, are made in good
faith and reflect our current judgment regarding future events, our actual
results will likely vary, sometimes materially, from any estimates, predictions,
projections, assumptions or other future performance suggested herein. The
forward-looking statements in this document are made as of the date of this
document and we do not intend or undertake to update any of the forward-looking
statements to conform these statements to actual results, except as required by
applicable law, including the securities laws of the United States.

- 2 -

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PART I  FINANCIAL INFORMATION

Item
1.           Financial
Statements

The following unaudited interim consolidated financial
statements of Park Place Energy Corp. are included in this Quarterly Report on
Form 10-Q:

|Description                                                                                                                                                                                               |  | Page
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----
|                                                                                                                                                                                                          |  |     
|Consolidated
      Balance Sheets as at March 31, 2008 and December 31, 2007:                                                                                                                             |  | 4   
|                                                                                                                                                                                                          |  |     
|Interim
      Consolidated Statements of Operations and Deficit for the Three Months
      Ended March 31, 2008 and 2007 and for the Period from May 4, 2006 (Date of
      Inception) to March 31, 2008: |  | 5   
|                                                                                                                                                                                                          |  |     
|Interim
      Consolidated Statement of Stockholders Equity from May 4, 2006 (Date of
      Inception) to March 31, 2008:                                                                                |  | 6   
|                                                                                                                                                                                                          |  |     
|Interim
      Consolidated Statements of Cash Flows for the Three Months Ended March 31,
      2008 and 2007 and for the Period from December 31, 2007 to March 31, 2008:                                 |  | 7   
|                                                                                                                                                                                                          |  |     
|Notes
      to Interim Consolidated Financial Statements:                                                                                                                                                 |  | 9   

- 3 -

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PARK PLACE ENERGY CORP.

BALANCE SHEET(an Exploration Stage Company)
(expressed in Canadian Dollars) (Unaudited)

|                                                           |   | March
      31, |   |   | December 31, |  
|---------------------------------------------------------- | - | --------------- | - | - | ------------ | -
|                                                           |   | 2008            |   |   | 2007         |  
|                                                           |   |                 |   |   |              |  
|                                                           |   |                 |   |   |              |  
|ASSETS                                                     |   |                 |   |   |              |  
|                                                           |   |                 |   |   |              |  
|Current                                                    |   |                 |   |   |              |  
|Cash                                                       | $ | 10,508          |   | $ | 117,491      |  
|Receivable                                                 |   | 23,697          |   |   | 21,937       |  
|Prepaid expenses                                           |   | 18,290          |   |   | 47,886       |  
|                                                           |   |                 |   |   |              |  
|Total current assets                                       |   | 52,495          |   |   | 187,314      |  
|                                                           |   |                 |   |   |              |  
|Fixed assets                                               |   |                 |   |   |              |  
|Property and equipment, net                                |   | 3,195           |   |   | 3,414        |  
|                                                           |   |                 |   |   |              |  
|Exploration advance                                        |   | 341,718         |   |   | 233,361      |  
|                                                           |   |                 |   |   |              |  
|Oil and gas properties(Note 4)                             |   | 3,848,586       |   |   | 3,429,818    |  
|                                                           |   |                 |   |   |              |  
|Mineral properties(Note 5)                                 |   | 262,184         |   |   | -            |  
|                                                           |   |                 |   |   |              |  
|Total assets                                               | $ | 4,508,178       |   | $ | 3,916,907    |  
|                                                           |   |                 |   |   |              |  
|                                                           |   |                 |   |   |              |  
|LIABILITIES AND SHAREHOLDERS' EQUITY                       |   |                 |   |   |              |  
|                                                           |   |                 |   |   |              |  
|Current liabilities                                        |   |                 |   |   |              |  
|Accounts payable
      and accrued liabilities             | $ | 130,390         |   | $ | 128,491      |  
|Loan payable (Note 3)                                      |   | 75,000          |   |   | 225,000      |  
|Due to related
      parties (Note 9)                      |   | 125,910         |   |   | 110,864      |  
|                                                           |   |                 |   |   |              |  
|Total current liabilities                                  |   | 331,300         |   |   | 464,175      |  
|                                                           |   |                 |   |   |              |  
|Shareholders' equity                                       |   |                 |   |   |              |  
|Common stock (Note 6)                                      |   |                 |   |   |              |  
|Authorized                                                 |   |                 |   |   |              |  
|1,200,000,000 par value $0.00001                           |   |                 |   |   |              |  
|Issued and outstanding                                     |   |                 |   |   |              |  
|48,865,335 common shares ( December 31, 2007  33,000,336) |   | 489             |   |   | 330          |  
|Additional
      paid-in capital (Note 6)                  |   | 9,235,686       |   |   | 7,932,363    |  
|Accumulated other comprehensive
      income               |   | 88,284          |   |   | 114,837      |  
|Deficit
      accumulated during the exploration stage     |   | (5,147,581      | ) |   | (4,594,798   | )
|                                                           |   |                 |   |   |              |  
|Total shareholders equity                                  |   | 4,176,878       |   |   | 3,452,732    |  
|                                                           |   |                 |   |   |              |  
|Total liabilities and shareholders equity                  | $ | 4,508,178       |   | $ | 3,916,907    |  

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

- 4 -

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PARK PLACE ENERGY CORP.

CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT AND
COMPREHENSIVE INCOME(an Exploration Stage Company) (expressed in
Canadian Dollars) (Unaudited)

|                                   |   | Cumulative Amounts From    |   |   |                    |   |   |                    |  
|---------------------------------- | - | -------------------------- | - | - | ------------------ | - | - | ------------------ | -
|                                   |   | Inception (May 4, 2006) To |   |   | Three Months Ended |   |   | Three Months Ended |  
|                                   |   | March 31, 2008             |   |   | March 31, 2008     |   |   | March 31, 2007     |  
|                                   |   |                            |   |   |                    |   |   |                    |  
|REVENUE                            |   |                            |   |   |                    |   |   |                    |  
|Oil and gas                        | $ | 130,449                    |   | $ | 35,751             |   | $ | -                  |  
|                                   |   |                            |   |   |                    |   |   |                    |  
|DIRECT COSTS                       |   |                            |   |   |                    |   |   |                    |  
|Depletion                          |   | 20,617                     |   |   | 5,724              |   |   | -                  |  
|Operating expenses                 |   | 42,310                     |   |   | 24,817             |   |   | -                  |  
|                                   |   |                            |   |   |                    |   |   |                    |  
|                                   |   | 67,522                     |   |   | 5,210              |   |   | -                  |  
|EXPENSES                           |   |                            |   |   |                    |   |   |                    |  
|Office and general                 |   | 276,557                    |   |   | 44,387             |   |   | 55,244             |  
|Depreciation                       |   | 652                        |   |   | 219                |   |   | -                  |  
|Foreign exchange gain              |   | 95,360                     |   |   | 2,125              |   |   | -                  |  
|Professional
      fees            |   | 367,060                    |   |   | 25,711             |   |   | 27,954             |  
|Consulting                         |   | 761,888                    |   |   | 172,167            |   |   | 126,321            |  
|Investor
      relations           |   | 425,729                    |   |   | 11,620             |   |   | -                  |  
|Management fees                    |   | 439,127                    |   |   | 98,260             |   |   | 60,000             |  
|Travel                             |   | 135,888                    |   |   | 32,686             |   |   | -                  |  
|Stock-based compensation           |   | 1,695,522                  |   |   | 170,818            |   |   | 6,572              |  
|                                   |   |                            |   |   |                    |   |   |                    |  
|                                   |   | (4,197,783                 | ) |   | (557,993           | ) |   | (276,091           | )
|Loss before other items and        |   | (4,130,261                 | ) |   | (552,783           | ) |   | (276,091           | )
|income taxes                       |   |                            |   |   |                    |   |   |                    |  
|                                   |   |                            |   |   |                    |   |   |                    |  
|OTHER ITEMS                        |   |                            |   |   |                    |   |   |                    |  
|Interest revenue                   |   | 15,240                     |   |   | -                  |   |   | 107                |  
|Write off oil and gas costs        |   | (1,282,471                 | ) |   | -                  |   |   | -                  |  
|                                   |   |                            |   |   |                    |   |   |                    |  
|Loss before income tax             |   | (5,397,492                 | ) |   | (552,783           | ) |   | (275,984           | )
|                                   |   |                            |   |   |                    |   |   |                    |  
|Future income tax recovery         |   | 291,060                    |   |   | -                  |   |   | (179,075           | )
|(expense)                          |   |                            |   |   |                    |   |   |                    |  
|                                   |   |                            |   |   |                    |   |   |                    |  
|Net loss for the period            |   | (5,106,432                 | ) |   | (552,783           | ) |   | (455,059           | )
|                                   |   |                            |   |   |                    |   |   |                    |  
|OTHER COMPREHENSIVE                |   |                            |   |   |                    |   |   |                    |  
|INCOME                             |   |                            |   |   |                    |   |   |                    |  
|Foreign currency
      translation |   | 88,284                     |   |   | (26,553            | ) |   | -                  |  
|adjustment                         |   |                            |   |   |                    |   |   |                    |  
|Comprehensive loss                 | $ | (5,018,148                 | ) | $ | (579,336           | ) | $ | (455,059           | )
|                                   |   |                            |   |   |                    |   |   |                    |  
|Basic and diluted loss per share   |   |                            |   | $ | (0.01              | ) | $ | (0.04              | )
|                                   |   |                            |   |   |                    |   |   |                    |  
|Weighted average number of         |   |                            |   |   | 38,738,075         |   |   | 12,630,244         |  
|shares outstanding  basic and     |   |                            |   |   |                    |   |   |                    |  
|diluted                            |   |                            |   |   |                    |   |   |                    |  

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

- 5 -

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PARK PLACE ENERGY CORP.

CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY(an
Exploration Stage Company) - (expressed in Canadian Dollars) - (Unaudited)

Common
        StockAccumulated OtherNumber of
      
      
      
      
      
      Additional Paid-In
      
      
      ComprehensiveShares
      
      
      Amount
      
      
      Capital
      
      
      Income
      
      
      Deficit
      
      
      TotalDecember 31, 2007
      
      33,000,336
      
      $
      330
      
      $
      7,932,363
      
      $
      114,837
      
      $
      (4,594,798
      )
      $
      3,452,732Issuance of common stockfor cash
      
      12,972,142
      
      
      130
      
      
      928,802
      
      
      -
      
      
      -
      
      
      928,932Issuance of common stock insettlement of debt
      
      2,142,857
      
      
      21
      
      
      149,979
      
      
      -
      
      
      -
      
      
      150,000Issuance of common stockper consulting
      
      750,000
      
      
      8
      
      
      76,732
      
      
      -
      
      
      -
      
      
      76,740Stock-basedcompensation
      
      -
      
      
      -
      
      
      170,818
      
      
      -
      
      
      -
      
      
      170,818Share issuance costs
      
      -
      
      
      -
      
      
      (23,008
      )
      
      
      
      
      
      
      
      (23,008
      )Cumulative translation
      
      -
      
      
      -
      
      
      -
      
      
      (26,553
      )
      
      -
      
      
      (26,553
      )adjustment
      
      -
      
      
      -
      
      
      -
      
      
      
      
      
      -
      
      
      -Net loss
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      (552,783
      )
      
      (552,784
      )March 31, 2008
      
      48,865,335
      
      $
      489
      
      $
      9,235,686
      
      $
      88,284
      
      $
      (5,147,581
      )
      $
      4,176,878


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

- 6 -

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PARK PLACE ENERGY CORP.(an Exploration Stage
Company) CONSOLIDATED STATEMENT OF CASH FLOW (expressed in Canadian
Dollars) (Unaudited)

|                                                              |   | Cumulative   |   |   |              |   |   |              |  
|------------------------------------------------------------- | - | ------------ | - | - | ------------ | - | - | ------------ | -
|                                                              |   | Amounts From |   |   |              |   |   |              |  
|                                                              |   | Inception    |   |   |              |   |   |              |  
|                                                              |   | on May 4,    |   |   | Three Months |   |   | Three Months |  
|                                                              |   | 2006 to      |   |   | Ended        |   |   | Ended        |  
|                                                              |   | March 31,    |   |   | March 31,    |   |   | March 31,    |  
|                                                              |   | 2008         |   |   | 2008         |   |   | 2007         |  
|                                                              |   |              |   |   |              |   |   |              |  
|                                                              |   |              |   |   |              |   |   |              |  
|                                                              |   |              |   |   |              |   |   |              |  
|CASH FLOW FROM OPERATING EXPENSES                             |   |              |   |   |              |   |   |              |  
|Loss for the period                                           | $ | (5,106,432   | ) | $ | (552,783     | ) | $ | (455,059     | )
|Depreciation                                                  |   | 652          |   |   | 219          |   |   | -            |  
|Stock-based compensation                                      |   | 1,695,522    |   |   | 170,818      |   |   | 6,572        |  
|Interest accrued
      on notes payable                       |   | 12,530       |   |   | -            |   |   | -            |  
|Consulting fees paid by issuance of common stock              |   | 81,016       |   |   | 76,740       |   |   | -            |  
|Investor relation
      fees paid by issuance of common stock |   | 58,430       |   |   | -            |   |   | -            |  
|Depletion                                                     |   | 20,617       |   |   | 5,724        |   |   | -            |  
|Future income tax
      recovery                              |   | (291,060     | ) |   | -            |   |   | 179,075      |  
|                                                              |   |              |   |   |              |   |   |              |  
|Changes in non-cash working capital
      items:              |   |              |   |   |              |   |   |              |  
|Increase (decrease) in receivable                             |   | (23,697      | ) |   | (1,760       | ) |   | 1,880        |  
|Increase
      (decrease) in prepaid expenses                 |   | (18,290      | ) |   | 29,596       |   |   | (3,395       | )
|Increase (decrease) in accounts payable and accrued           |   |              |   |   |              |   |   |              |  
|liabilities                                                   |   | 73,556       |   |   | (24,354      | ) |   | 39,476       |  
|Increase in due to related parties                            |   | 117,255      |   |   | 15,226       |   |   | -            |  
|                                                              |   |              |   |   |              |   |   |              |  
|Net cash used in
      operating activities                   |   | (3,379,901   | ) |   | (280,574     | ) |   | (231,451     | )
|                                                              |   |              |   |   |              |   |   |              |  
|                                                              |   |              |   |   |              |   |   |              |  
|                                                              |   |              |   |   |              |   |   |              |  
|CASH FLOW FROM INVESTING ACTIVITIES                           |   |              |   |   |              |   |   |              |  
|Oil and gas interests                                         |   | (3,310,685   | ) |   | (335,239     | ) |   | (6,696       | )
|Exploration advances                                          |   | (341,718     | ) |   | (108,357     | ) |   | (200,000     | )
|Mineral Properties                                            |   | (262,184     | ) |   | (262,184     | ) |   | -            |  
|Loan receivable
      (payable)                               |   | (532,000     | ) |   | -            |   |   | 121,000      |  
|Cash acquired through recapitalization                        |   | 320          |   |   | -            |   |   | -            |  
|Acquisition of property
      and equipment                   |   | (3,847       | ) |   | -            |   |   | -            |  
|                                                              |   |              |   |   |              |   |   |              |  
|Net cash used in investing
      activities                   |   | (4,450,114   | ) |   | (705,780     | ) |   | (85,696      | )

Continued

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

- 7 -

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PARK PLACE ENERGY CORP.CONSOLIDATED STATEMENT OF
CASH FLOWS (an Exploration Stage Company) (expressed in Canadian
Dollars) (Unaudited)

|                                                                  |   | Cumulative   |   |   |                |   |   |              | 
|----------------------------------------------------------------- | - | ------------ | - | - | -------------- | - | - | ------------ | 
|                                                                  |   | Amounts From |   |   |                |   |   |              | 
|                                                                  |   | Inception    |   |   |                |   |   |              | 
|                                                                  |   | on May 4,    |   |   |                |   |   | Three Months | 
|                                                                  |   | 2006 to      |   |   | Three Months   |   |   | Ended        | 
|                                                                  |   | March 31,    |   |   | Ended March    |   |   | March 31,    | 
|                                                                  |   | 2008         |   |   | 31,
      2008 |   |   | 2007         | 
|                                                                  |   |              |   |   |                |   |   |              | 
|Continued                                                         |   |              |   |   |                |   |   |              | 
|                                                                  |   |              |   |   |                |   |   |              | 
|                                                                  |   |              |   |   |                |   |   |              | 
|                                                                  |   |              |   |   |                |   |   |              | 
|CASH FLOW FROM FINANCING
      ACTIVITIES                         |   |              |   |   |                |   |   |              | 
|Proceeds from issuance of
      capital stock                     |   | 7,142,267    |   |   | 905,924        |   |   | 423,500      | 
|Proceeds
      from loans                                         |   | 625,000      |   |   | -              |   |   | -            | 
|Repurchase of common
      stock                                  |   | (15,028      | ) |   | -              |   |   | -            | 
|                                                                  |   |              |   |   |                |   |   |              | 
|Net cash provided by financing
      activities                   |   | 7,752,239    |   |   | 905,924        |   |   | 423,500      | 
|                                                                  |   |              |   |   |                |   |   |              | 
|Effect of foreign exchange on cash                                |   | 88,284       |   |   | (26,553        | ) |   | -            | 
|                                                                  |   |              |   |   |                |   |   |              | 
|                                                                  |   |              |   |   |                |   |   |              | 
|Change in cash during the
      period                            |   | 10,508       |   |   | (106,983       | ) |   | 106,353      | 
|                                                                  |   |              |   |   |                |   |   |              | 
|                                                                  |   |              |   |   |                |   |   |              | 
|Cash position, beginning of period                                |   | -            |   |   | 117,491        |   |   | 4,517        | 
|                                                                  |   |              |   |   |                |   |   |              | 
|                                                                  |   |              |   |   |                |   |   |              | 
|Cash position, end of period                                      | $ | 10,508       |   | $ | 10,508         |   | $ | 110,870      | 
|                                                                  |   |              |   |   |                |   |   |              | 
|Supplemental disclosure with respect to
      cash flows (Note 8) |   |              |   |   |                |   |   |              | 

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

- 8 -

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|PARK PLACE ENERGY CORP.                       
|----------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|(an Exploration Stage Company)                
|(expressed in Canadian Dollars)               
|AS AT MARCH 31, 2008                          
|(Unaudited)                                   
|                                              

|1. | NATURE AND CONTINUANCE OF OPERATIONS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | Park Place Energy Corp. formerly ST Online Corp. (the
      Company) was incorporated under the laws of the State of Nevada on
      August 27, 2004. On June 22, 2007, the Company entered into a Business
      Combination Agreement with Park Place Energy Inc., a private company
      incorporated under the laws of the Province of Alberta, Canada, and
      0794403 B.C. Ltd., a British Columbia corporation and wholly-owned
      subsidiary of the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | On July 6, 2007, the Company affected a forward split of
      its shares of common stock on the basis of eight new shares of common
      stock for each one share of common stock outstanding on that date and
      increased the authorized share capital from 100,000,000 shares of common
      stock to 800,000,000 shares of common stock. At the same time, the Company
      merged with a wholly-owned subsidiary, Park Place Energy Corp. which
      incorporated under the laws of the State of Nevada in contemplation of the
      acquisition of all of the issued and outstanding shares of Park Place
      Energy Inc. and the name of the Company was then changed to Park Place
      Energy Corp. On July 23, 2007, the Company effected a forward split of its
      shares of common stock on the basis of one and one-half new shares of
      common stock for each one share of common stock outstanding on that date
      and increased authorized share capital from 800,000,000 shares of common
      stock to 1,200,000,000 shares of common stock. Pursuant to the terms of
      the Business Combination Agreement, the Company issued to each shareholder
      of record of Park Place Energy Inc. at the time of the acquisition one
      share of our common stock for every two shares they held of Park Place
      Energy Inc. As a result, the Company issued 8,995,662 shares of common
      stock to the former shareholders of Park Place Energy Inc.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | On July 30, 2007, the Company acquired Park Place Energy
      Inc. and the business of the Company is now the acquisition and
      exploration of oil and gas and diamond interests. Park Place Energy Corp.
      holds exploration interests in a property in Tennessee, USA. Park Place
      Energy (Canada) Inc. holds the exploration interests in five properties in
      the provinces of British Columbia, Alberta and Saskatchewan, in Canada.
      The Company has completed test drilling at certain of the properties in
      which it holds interests. The Company is underway to develop certain of
      these properties for production. A limited amount of oil and gas is
      produced currently at one of our properties. For accounting purposes, the
      merger was treated as a recapitalization with Park Place Energy Inc. being
      the accounting acquirer and the go-forward financial statements reflect
      the history of Park Place Energy Inc. from its inception on May 4, 2006.
      The fiscal year- end of Park Place Energy Corp. was changed to December 31
      from September 30, consequently the current period presented is for the
      three months ended March 31, 2008 and the comparative figures presented
      are for the period from inception on May 4, 2006 to March 31, 2008 and for
      the three months ended March 31, 2007.                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | On November 22, 2007 a new private company, Park Place
      Energy (International) Inc. was incorporated under the laws of British
      Columbia, Canada. This company is a wholly owned subsidiary of Park Place
      Energy Corp.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | Park Place Energy Inc. was renamed to Park Place Energy
      (Canada) Inc. on September 14, 2007.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

- 9 -

---

|PARK PLACE ENERGY CORP.                       
|----------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|(an Exploration Stage Company)                
|(expressed in Canadian Dollars)               
|AS AT MARCH 31, 2008                          
|(Unaudited)                                   
|                                              

|1. | NATURE AND CONTINUANCE OF OPERATIONS(contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | These financial statements have been prepared on a going
      concern basis, which assumes the realization of assets and settlement of
      liabilities in the normal course of business. The Company has earned to
      date insignificant revenues since inception and has had a history of
      negative cash flows from operating activities. In addition, the Company
      has an accumulated deficit of $5,147,581 as of March 31, 2008. These
      considerations raise substantial doubt about the Companys ability to
      continue as a going concern. Accordingly, the Company will require
      continued financial support from its shareholders and creditors until it
      is able to generate sufficient cash flow from operations on a sustained
      basis. Although there is doubt that the Company will be successful at
      achieving these results during the recent quarter ended March 31, 2008 the
      Company raised a total of $928,932 in new equity. Failure to obtain the
      ongoing support of its stockholders and creditors may make the going
      concern basis of accounting inappropriate, in which case the Companys
      assets and liabilities would need to be recognized at their liquidation
      values. These financial statements do not include any adjustments relating
      to the recoverability and classification of recorded asset amounts and
      classification of liabilities that might arise from this
    uncertainty.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|2. | SUMMARY OF SIGNIFICANT ACCOUNTING
  POLICIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | The accompanying unaudited financial statements have been
      prepared by the Company in conformity with accounting principles generally
      accepted in the United States of America applicable to interim financial
      information and with the rules and regulations of the United States
      Securities and Exchange Commission. Accordingly, certain information and
      footnote disclosures normally included in financial statements prepared in
      accordance with generally accepted accounting principles have been
      condensed, or omitted, pursuant to such rules and regulations. In the
      opinion of management, the unaudited interim financial statements include
      all adjustments necessary for the fair presentation of the results of the
      interim periods presented. All adjustments are of a normal recurring
      nature, except as otherwise noted below. These financial statements should
      be read in conjunction with the Companys audited consolidated financial
      statements and notes thereto for the year ended December 31, 2007,
      included in the Companys Form 10- KSB, filed April 15, 2008, with the
      Securities and Exchange Commission. The results of operations for the
      interim periods are not necessarily indicative of the results of
      operations for any other interim period or for a full fiscal
  year.                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | Recent accounting pronouncements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | FASB Staff Position 157-2 (FSP FAS 157-2) delayed the
      effective date of FAS 157 until fiscal years beginning after November 15,
      2008, and interim periods within those fiscal years, for all non-financial
      assets and non-financial liabilities, except for items that are recognized
      or disclosed at fair value in the financial statements on a recurring
      basis (at least annually). The Company adopted FAS 157 on January 1, 2008,
      and unutilized the one year deferral for non-financial assets and
      non-financial liabilities that was granted by FAP FAS 157-2. The adoption
      of FAS 157 did not have a material impact on the Companys consolidated
      financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | In February, 2007, the FASB issued SFAS No. 159 The Fair
      Value Option for Financial Assets and Financial Liabilities. SFAS No. 159
      permits entities to choose to measure many financial assets and financial
      liabilities at fair value. Unrealized gains and losses on items for which
      the fair value option has been elected are reported in earning. SFAS No.
      159 is effective for fiscal years beginning after November 15,
  2007.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

- 10 -

---

|PARK PLACE ENERGY CORP.                       
|----------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|(an Exploration Stage Company)                
|(expressed in Canadian Dollars)               
|AS AT MARCH 31, 2008                          
|(Unaudited)                                   
|                                              

|2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | The Company is currently assessing the impact of SFAS No.
      159 on its financial position and results of operations, but does not
      anticipate a material impact. The adoption on FAS 159 did not have a
      material impact on the Companys consolidated financial
  statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | In March 2008, the FASB issued FAS No. 161, Disclosures
      about Derivative Instruments and Hedging Activities (FAS 161). FAS 161
      changes the disclosure requirements for derivative instruments and hedging
      activities by requiring enhanced disclosures about how and why an entity
      uses derivative instruments, how derivative instruments and related hedged
      items are accounted for under FAS 133, and how derivative instruments and
      related hedged items affect an entitys operating results, financial
      position, and cash flows. The Company is currently reviewing the provision
      of FAS 161 and has not yet adopted the statement. However, as the
      provision of FAS 161 are only related to disclosure of derivative and
      hedging activities, the Company does not believe the adoption of FAS 161
      will have a material impact on its consolidated operating results,
      financial position or cash flows.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|3. | LOAN PAYABLE                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | The Company entered into a loan agreement with an arms
      length third party in the amount of $225,000 on December 28, 2007. The
      associated Demand Promissory Note does not contain any interest and the
      holder has the option to convert the loan in to common shares of the
      Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | The Company converted $150,000 out of a total $225,000 to
      2,142,857 units at a price of $0.07 per unit on March 3, 2008. Each unit
      consisted of one common stock of the company and one share purchase
      warrant. Each warrant entitles the holder to purchase one share at an
      exercise price of $0.10 per share in the first year and at an exercise
      price of $0.15 per share in the second year.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

- 11 -

---

|PARK PLACE ENERGY CORP.                       
|----------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|(an Exploration Stage Company)                
|(expressed in Canadian Dollars)               
|AS AT MARCH 31, 2008                          
|(Unaudited)                                   
|                                              

|4. | OIL AND GAS PROPERTIES                                                                                                                            
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                   
|   | The Company entered into agreements to acquire interests
      in various oil and gas properties in Canada and the United States as
      follows:

| |                                            |   | Three
      Months | 
| | ------------------------------------------ | - | ------------------ | 
| |                                            |   | Ended              | 
| |                                            |   | March 31, 2008     | 
| |                                            |   |                    | 
| | Unproven Properties                        |   |                    | 
| |                                            |   |                    | 
| | OIL AND GAS INTERESTS                      |   |                    | 
| |                                            |   |                    | 
| | Canada                                     | $ | 3,674,601          | 
| | USA                                        |   | 86,972             | 
| |                                            |   |                    | 
| | Total Unproved Properties                  | $ | 3,761,533          | 
| |                                            |   |                    | 
| | Proven Properties                          |   |                    | 
| |                                            |   |                    | 
| | Canada                                     |   | 87,053             | 
| |                                            |   |                    | 
| | Total Proven
      Properties              | $ | 87,053             | 
| |                                            |   |                    | 
| | Total
      Proven and Unproved Properties | $ | 3,848,586          | 

|5. | MINERAL PROPERTIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | In March, 2008, the Company acquired a 51% interest in
      six diamond concessions in the state of Goias, Brazil for
  $262,184.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|6. | COMMON STOCK                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | The Companys Articles Of Incorporation provide for the
      issuance of up to 1,200,000,000 shares of common stock, par value
      $0.00001. Effective July 6, 2007 the Company implemented a stock split of
      its common stock by issuing eight new shares for every one old share.
      Effective July 23, 2007 the Company implemented a further a stock split of
      its common stock by issuing one and a half new shares for every old share.
      Except as otherwise stated to the contrary in these financial statements,
      all references to shares and prices per shares have been adjusted to give
      retroactive effect to the stock splits.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | On February 13, 2008 the Company issued 4,435,714 shares
      of common stock at a price of US$0.07 for gross proceeds of
    US$310,500.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | On February 20, 2008 the company issued 750,000 shares of
      common stock as a settlement of debt to an arms length third party at a
      price of US$0.10 for gross proceeds of US$75,000.                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

- 12 -

---

|PARK PLACE ENERGY CORP.                       
|----------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|(an Exploration Stage Company)                
|(expressed in Canadian Dollars)               
|AS AT MARCH 31, 2008                          
|(Unaudited)                                   
|                                              

|6. | COMMON STOCK(contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | On February 29, 2008 the Company issued 8,536,428 shares
      of common stock at a price of US$0.07 for gross proceeds of
    US$597,550.                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | On March 3, 2008 the Company issued 2,142,857 shares of
      common stock as a settlement of debt to an arms length party at a price of
      CAD$0.07 for gross proceeds of CAD$150,000.                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | Stock Options                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | The Company adopted an official incentive Stock Option
      plan as at October 11, 2007 whereby the total number of authorized options
      to be granted is up to total of 6,000,000 Common Shares. Under the plan
      the exercise price of each option shall not be less that the market price
      of the Companys stock as calculated immediately preceding the day of the
      grant. The vesting schedule for each option shall be specified by the
      Company at the time of grant.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | On January 29, 2008 all outstanding stock options
      (3,160,000) were repriced to US$0.15.                                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | As at March 31, 2008, the Company had outstanding stock
      options, enabling the holders to acquire further common shares as
      follows:                                                                                                                                                                                                                                                                                                                                                       

Numberof
      Options
    Exercise Price
    Expiry
      Date500,000
    US$
    0.15
    April 2, 2011100,000
    
    0.15
    April 4, 2011125,000
    
    0.15
    May 15, 2010125,000
    
    0.15
    May 15, 2010100,000
    
    0.15
    May 21, 2008150,000
    
    0.15
    August 13, 2012200,000
    
    0.15
    August 13, 2008120,000
    
    0.15
    August 13, 2012100,000
    
    0.15
    September 11, 2008200,000
    
    0.15
    September 25, 2011340,000
    
    0.15
    September 25, 2009150,000
    
    0.15
    October 11, 2009200,000
    
    0.15
    November 16, 2009100,000
    
    0.15
    November 16, 2011400,000
    
    0.15
    November 16, 2008100,000
    
    0.15
    December 1, 2008100,000
    
    0.15
    December 16, 2009100,000
    
    0.15
    February 11, 2010250,000
    
    0.15
    February 21, 2010Balance as of March 31, 2008
    3,460,000


- 13 -

---

|PARK PLACE ENERGY CORP.                       
|----------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|(an Exploration Stage Company)                
|(expressed in Canadian Dollars)               
|AS AT MARCH 31, 2008                          
|(Unaudited)                                   
|                                              

Stock option transactions are
summarized as follows:

| |                                           |  | March
      31, 2008 |   |   | December 31, 2007 | 
| | ----------------------------------------- |  | -------------------- | - | - | ----------------- | 
| |                                           |  |                      |   |   | Weighted          | 
| |                                           |  |                      |   |   | Average           | 
| |                                           |  | Number of            |   |   | Exercise          | 
| |                                           |  | Options              |   |   | Price             | 
| |                                           |  |                      |   |   |                   | 
| | Balance, beginning of period (post split) |  | 3,160,000            |   | $ | 0.76              | 
| | Granted                                   |  | 350,000              |   |   | 0.15              | 
| | Expired / cancelled                       |  | (50,000              | ) |   | 0.25              | 
| | Balance, end of period                    |  | 3,460,000            |   | $ | 0.15              | 
| | Options exercisable, end of period        |  | 3,460,000            |   |   | 0.15              | 

Options  Stock-Based Compensation

As of March 31, 2008 the Company
granted incentive stock options in accordance with its share option plan to
directors and officers with an estimated fair value of $31,168. An additional
$139,650 was recorded due to the re-pricing of the options.

The following weighted-average
assumptions were used for the Black-Scholes valuation of stock options granted
during the noted period:

| |                          | 2008   
| | ------------------------ | -------
| |                          |        
| | Risk-free interest rate  | 3.22%  
| | Expected life of options | 2 years
| | Annualized volatility    | 105.23%
| | Dividend rate            | 0.00%  

The weighted fair value of options
granted was $0.15.

- 14 -

---

|PARK PLACE ENERGY CORP.                       
|----------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|(an Exploration Stage Company)                
|(expressed in Canadian Dollars)               
|AS AT MARCH 31, 2008                          
|(Unaudited)                                   
|                                              

|6. | COMMON STOCK(contd)
      Warrants
|-- | ------------------------------------

US$ Exercise
      
      
      
      
      
      US$Number of
      
      
      
      
      
      Price
      
      
      Exercise PriceWarrants
      
      
      First
        Year
      
      
      Second
        YearBalance, December 31, 2007
      
      7,356,914
      
      
      US$
      
      
      0.50
      
      
      US$
      
      
      0.75February 13, 2008
      
      4,435,714
      
      
      
      
      
      0.10
      
      
      
      
      
      0.15February 29, 2008
      
      8,536,428
      
      
      
      
      
      0.10
      
      
      
      
      
      0.15March 3, 2008
      
      2,142,857
      
      
      CAD$
      
      
      0.10
      
      
      CAD$
      
      
      0.15Balance, March 31, 2008
      
      22,471,913


|7. | SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH
      FLOWS
|-- | --------------------------------------------------------

| |                                            |   | Three
      months |  |   | Three
      months | 
| | ------------------------------------------ | - | ------------------ |  | - | ------------------ | 
| |                                            |   | Ended              |  |   | Ended              | 
| |                                            |   | March 31,          |  |   | March 31,          | 
| |                                            |   | 2008               |  |   | 2007               | 
| |                                            |   |                    |  |   |                    | 
| | Cash paid during the year for interest     | $ | -                  |  | $ | -                  | 
| |                                            |   |                    |  |   |                    | 
| | Cash paid during the year for income taxes | $ | -                  |  | $ | -                  | 

Significant non-cash transactions
during the quarter ended March 31, 2008 included:

| | a) | Included in accounts payable and accrued liabilities is
      $26,327 related to oil and gas expenditures.                                                                                                    
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                               
| | b) | During the 3 months period ended March 31, 2008, the
      Company issued 2,142,857 common shares at a price of CAD$0.07 per share
      for settlement of an outstanding debt in the amount of
  CAD$150,000.

- 15 -

---

|PARK PLACE ENERGY CORP.                       
|----------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|(an Exploration Stage Company)                
|(expressed in Canadian Dollars)               
|AS AT MARCH 31, 2008                          
|(Unaudited)                                   
|                                              

|8.  | SUPPLEMENTAL DISCLOSURE WITH RESPECT TO
        CASH FLOWS(contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | c)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | There were no significant non-cash transactions
        for the three months period ended March 31, 2007.                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|9.  | RELATED PARTY TRANSACTIONS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | During the period ended March 31, 2008 the
        Company entered into the following transactions with related parties:                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | The Company amended the management agreement
        dated January 1, 2007 with the Chairman who was paid $20,000 per month
        as part of the remuneration for his duties. The agreement is for a three-year
        period ended December 31, 2010. Effective as of April 1, 2008 the Chairman
        now receives $10,000 per month for services rendered.                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | The Company paid or accrued management fees
        of $60,000 to the Chairman and paid or accrued management fees of $37,500
        to the President & CEO of the Company.Also included in due
        to related parties as of March 31, 2008 is $2,548 that is owing to the
        Chairman for payments of expenses on behalf of the Company and $60,538
        owing to companies related to the Chairman for payments of expenses on
        behalf of the Company. The amount is unsecured non-interest bearing, and
        has no specific terms of repayment.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | Related party transactions are in the normal
        course of operations, occurring on terms and conditions that are similar
        to those of transactions with unrelated parties and, therefore, are measured
        at the exchange amount.                                                                                                                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|10. | SEGMENTED INFORMATION                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | The Company's operations are in the resource
        industry in Canada, the United States and Brazil.                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

- 16 -

---

|PARK PLACE ENERGY CORP.                       
|----------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|(an Exploration Stage Company)                
|(expressed in Canadian Dollars)               
|AS AT MARCH 31, 2008                          
|(Unaudited)                                   
|                                              

|10. | SEGMENTED INFORMATION(contd)
      Geographical information is as
follows:
|--- | ----------------------------------------------------------------------------

| |                        |   | March
      31, | 
| | ---------------------- | - | --------------- | 
| |                        |   | 2008            | 
| |                        |   |                 | 
| | Oil and gas properties |   |                 | 
| | Canada                 | $ | 3,291,270       | 
| | United States          |   | 557,316         | 
| |                        |   |                 | 
| |                        | $ | 3,848,586       | 

All of the Companys oil and gas
revenues are in Canada.

The Companys operations in the mineral
exploration industry are in Brazil.

| |                    |   | March 31, | 
| | ------------------ | - | --------- | 
| |                    |   | 2008      | 
| |                    |   |           | 
| | Diamond properties |   |           | 
| | Brazil             | $ | 262,184   | 

|11. | FINANCIAL INSTRUMENTS                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    | The Company's financial instruments consist of cash,
      receivable, accounts payable and accrued liabilities, loan payable and due
      to related parties. Unless otherwise noted, it is management's opinion
      that the Company is not exposed to significant interest, currency or
      credit risks arising from these financial instruments. The fair value of
      these financial instruments approximates their carrying value, unless
      otherwise noted.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|12. | SUBSEQUENT EVENTS                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    | Subsequent to March 31, 2008 the Company:                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    | a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    | b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

- 17 -

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Item
2.           Managements
Discussion and Analysis

As used in this quarterly report: (i) the terms we, us,
our and the Company mean Park Place Energy Corp.; (ii) SEC refers to the
Securities and Exchange Commission; (iii) Exchange Act refers to the United
States Securities Exchange Act of 1934, as amended; (iv) Securities Act refers
to the United States Securities Act of 1933, as amended; and (v) all dollar
amounts are in Canadian dollars unless otherwise indicated.

The following discussion of our plan of operations, results of
operations and financial condition as at and for the three months ended March
31, 2008 should be read in conjunction with: (i) our unaudited interim
consolidated financial statements and related notes for the three months ended
March 31, 2008 included in this Quarterly Report; and (ii) our Annual Report on
Form 10-KSB for the year ended December 31, 2007, including our annual audited
financial statements set forth therein.

Overview

General

Prior to our acquisition of Park Place Energy Inc. (Park Place
Canada) in July 2007, we operated an e-commerce website. However, this business
did not progress as anticipated and we determined to pursue other opportunities.

On July 30, 2007, we completed the acquisition of all of the
issued and outstanding shares of Park Place Canada, which was engaged in the
exploration for oil and natural gas. In addition, pursuant to the terms of the
acquisition, we disposed of our interest in and to the e-commerce website and
acquired the shares of our common stock held by certain former officers and
directors of our company.

For more information relating to the acquisition and related
reorganization, see our Annual Report on Form 10-KSB for the year ended December
31, 2007 filed with the SEC on April 15, 2008.

The closing of the acquisition of Park Place Canada represented
a change in control of our Company. For accounting purposes, this change in
control constitutes a re-capitalization of the Company, and the acquisition has
been accounted for as a reverse merger whereby we, as the legal acquirer, are
treated as the acquired entity, and Park Place Canada, as the legal subsidiary,
is treated as the acquiring company with the continuing operations.

Our Business

As a result of the acquisition, we are an exploration stage
company engaged in the exploration for conventional oil and natural gas, as well
as diamonds. In the projects in which we hold interests, another party typically
acts as the operator of the project and we provide to the operator timely
funding for our proportionate share of costs, as well as technical input on best
developing the related property. To control our overhead, we engage the services
of consultants who have technical expertise to best represent our interests. We
currently hold interests in oil and gas

- 18 -

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properties in the Provinces of British Columbia, Alberta and
Saskatchewan, Canada and in Morgan County, Tennessee. Additionally, we have a
diamond resource project in Central Brazil.

In March 2008, we acquired a 51% interest in six diamond
concessions in Central Brazil in exchange for the payment of $262,184.

A limited amount of revenue is currently being generated from
our Kerrobert oil property in the Province of Saskatchewan, Canada. Revenues
from our Eight Mile Gas Property in Northeast British Columbia and our interest
in the Morgan Highpoint #3 Discovery Well in Tennessee are anticipated to
commence in the second quarter of 2008. We continue to work on developing our
other properties as well identifying new properties for acquisition.

For more information regarding our business, see our Annual
Report on Form 10-KSB filed with the SEC on April 15, 2008.

Plan Of Operations

Overview

Our Plan Of Operations for the next 12 months is to concentrate
on three projects: developing our Eight Mile Property in British Columbia,
Canada for production; drilling additional test wells on our Tennessee property;
and advancing our interest in the six diamond concessions located in Central
Brazil.

Over the next 12 months, we plan to conduct the following: (i)
on the Eight Mile Property in British Columbia, we expect to drill one or two
more wells at an estimated net expense of $1,000,000 per well; (ii) we expect to
complete a pipeline that will enable delivery of natural gas from certain wells
on the Eight Mile Property at an aggregate estimated expense of $1,000,000;
(iii) on the Morgan Highpoint Project in Tennessee, we expect to drill and
complete additional wells at an estimated net expense of $510,000; and (iv) on
the six diamond concessions located in Central Brazil, we anticipate an
estimated expense of $360,000 in advancing our interests. Further, we expect to
spend approximately $250,000 in the next 12 months in office and general
expenses, as well as approximately $700,000 in professional, consulting and
management fees.

Estimated Capital Costs

Based on the foregoing, we anticipate that we will require
approximately $4,820,000 to pursue our Plan Of Operations over the next 12
months. We had cash of $10,508 and a working capital deficit of $278,805 as at
March 31, 2008, however, in April 2008, we completed a financing of units for
aggregate proceeds of $900,000. Consequently we will require additional
financing to pursue our Plan Of Operations over the next 12 months. There can be
no assurance that we will obtain any additional financing in the amounts
required or on terms favorable to us. If we are unable to obtain additional
financing, we may have to re-evaluate or abandon our business activities and
revise our Plan Of Operations.

We believe that debt financing will not be an alternative for
funding as we do not have any significant tangible assets to secure any debt
financing. We anticipate that additional funding will be in the form of equity
financing from the sale of our common stock. However, we cannot

- 19 -

---

provide investors with any assurance that we will be able to
raise sufficient funding from the sale of our common stock to fund our plan of
operations going forward. In the absence of such financing, our business plan
will fail. Even if we are successful in obtaining equity financing, there is no
assurance that we will obtain the funding necessary to pursue our business plan.
If we do not continue to obtain additional financing going forward, we will be
forced to re-evaluate or abandon our plan of operations.

Result of Operations

Three Months Ended March 31, 2008 Compared to the Three
Months Ended March 31, 2007

The following table sets out our net loss for the periods
indicated:

|                         | Three Months Ended | Three Months Ended
|------------------------ | ------------------ | ------------------
|                         | March 31, 2008     | March 31, 2007    
|                         | (Unaudited)        | (Unaudited)       
|Oil and Gas Revenue      | $35,751            | $---              
|Direct Costs             |                    |                   
|Depletion                | 5,724              | ---               
|Operating expenses       | 24,817             | ---               
|Expenses                 |                    |                   
|Office and general       | 44,387             | 55,244            
|Depreciation             | 219                | ---               
|Foreign exchange gain    | 2,125              | ---               
|Professional fees        | 25,711             | 27,954            
|Consulting               | 172,167            | 126,321           
|Investor
      relations | 11,620             | ---               
|Management fees          | 98,260             | 60,000            
|Travel                   | 32,686             | ---               
|Stock-based compensation | 170,818            | 6,572             
|Net Loss                 | 579,336            | 455,059           

Oil and Gas Revenue

Our oil and gas revenue for the three month period ended March
31, 2008 was CDN$35,751, compared to $Nil for the prior period of 2007. This
revenue results from production at our Kerrobert Property, which is immaterial
to our overall exploration operations. This revenue is offset by direct costs of
CDN$5,724 in depletion and CDN$24,817 in operating expenses for the three month
period ended March 31, 2008, compared to $Nil in the prior period of 2007.

Office and General Expenses

Our office and general expenses decreased to CDN$44,387 for the
three months ended March 31, 2008 from CDN$55,244 for the prior period of 2007
as a result of operating efficiencies.

- 20 -

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Foreign Exchange Gain

In the three months ended March 31, 2008, we realized a foreign
exchange gain of CDN$2,125, compared to $Nil for the prior period of 2007. This
increase is the result of currency fluctuations among the Canadian dollar, the
United States dollar and the British pound and our increased business activities
in the United Kingdom.

Professional Fees

Our professional fees decreased to CDN$25,711 for the three
months ended March 31, 2008 from CDN$27,954 for the prior period of 2007 as a
result of operating efficiencies.

Consulting Expenses

Our consulting expenses increased to CDN$172,167 for the three
months ended March 31, 2008 from CDN$126,321 for the prior period of 2007 as a
result of increased business activity.

Investor Relations Expenses

Our investor relations expense for the three months ended March
31, 2008 was $11,620 compared to $Nil for the prior period of 2007, due to
increased financing activities and growth of our investor base.

Management Fees

Our management fees increased to CDN$98,260 for the three
months ended March 31, 2008 from CDN$60,000 for the prior period of 2007 as a
result of increased business activity.

Travel Expenses

Our travel expenses increased to CDN$32,686 for the three
months ended March 31, 2008 from $Nil for the prior period of 2007 as a result
of a increased business activity requiring travel for our management and
consultants.

Stock-Based Compensation Expenses

Our stock-based compensation expenses increased to CDN$170,818
for the three months ended March 31, 2008 from $6,572 for the prior period of
2007 as a result of increased business activity requiring significantly more
work by our consultants.

Net Loss

As a result of the above, our net loss for the three months
ended March 31, 2008 was CDN$579,336 compared to CDN$455,059 for the prior
period of 2007.

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Liquidity and Capital Resources

|                          |   | As at          |   |   | As at             |  
|------------------------- | - | -------------- | - | - | ----------------- | -
|                          |   | March 31, 2008 |   |   | December 31, 2007 |  
|                          |   | (Unaudited)    |   |   | (Audited)         |  
|                          |   |                |   |   |                   |  
|Cash                      | $ | 10,508         |   | $ | 117,491           |  
|Working capital (deficit) |   | (278,805       | ) |   | (276,861          | )
|Total assets              |   | 4,508,178      |   |   | 3,916,907         |  
|Total liabilities         |   | 331,300        |   |   | 464,175           |  
|Shareholders equity      |   | 4,176,878      |   |   | 3,452,732         |  

We anticipate that we will require approximately $4,820,000 to
pursue our plan of operations over the next 12 months. We had cash of $10,508
and a working capital deficit of $278,805 as at March 31, 2008, however, in
April 2008, we completed a financing of units for gross proceeds of $900,000. We
will require additional financing to pursue our plan of operations over the next
12 months. There can be no assurance that we will obtain any additional
financing in the amounts required or on terms favorable to us. If we are unable
to obtain additional financing, we may have to re-evaluate or abandon our
business activities and plan of operations.

Cash Used in Operating Activities

Cash used in operating activities in the three months ended
March 31, 2008 increased to CDN$280,574 from CDN$231,451 in the prior period of
2007, due to increased operations.

Cash Used In Investing Activities

Cash used in investing activities in the three months ended
March 31, 2008 was CDN$705,780, compared to CDN$85,696 in the prior period of
2007. These represent investments in our oil and gas properties and loans to
another oil and gas exploration company.

Cash Provided By Financing Activities

We have funded our business to date primarily from sales of our
common stock. In the three months ended March 31, 2008, we received cash of
CDN$905,924 as a result of proceeds from the sale of our capital stock, compared
to CDN$423,500 in the prior period of 2007.

Going Concern

As shown in the accompanying financial statements, we have
incurred significant losses since inception and have not generated any revenues
to date. The future of our company is dependent upon our ability to obtain
sufficient financing and upon achieving future profitable operations. These
factors, among others, raise substantial doubt about our companys ability to
continue as a going concern. The accompanying consolidated financial statements
do not include any adjustments that might result from the outcome of this
uncertainty.

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Future Financings

We anticipate continuing to rely on equity sales of our common
shares in order to continue to fund our business operations. Issuances of
additional shares will result in dilution to our existing shareholders. There is
no assurance that we will achieve any additional sales of our equity securities
or arrange for debt or other financing to fund our business plan.

Critical Accounting Policies

Our financial statements are impacted by the accounting
policies used and the estimates and assumptions made by management during their
preparation. A complete summary of these policies is included in Note 2 of the
notes to our historical financial statements for the year ended December 31,
2007.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements that have or are
reasonably likely to have a current or future effect on our financial condition,
changes in financial condition, revenues or expenses, results of operations,
liquidity, capital expenditures or capital resources that are material to
investors.

Item
3.           Quantitative and
Qualitative Disclosure About Market Risk

Not Applicable.

Item
4T.        Controls And Procedures

As required by Rule 13a-15 under the Exchange Act, we carried
out an evaluation of the effectiveness of the design and operation of our
disclosure controls and procedures as of March 31, 2008, being the date of our
most recently completed quarter. This evaluation was carried out under the
supervision and with the participation of our Chief Executive Officer and
Principal Accounting Officer. Based upon that evaluation, our Chief Executive
Officer and Principal Accounting Officer concluded that our disclosure controls
and procedures are effective to ensure that information required to be disclosed
by us in the reports that we file or submit under the Exchange Act is recorded,
processed, summarized and reported within the time periods specified by the
rules and forms of the SEC.

Disclosure controls and procedures are controls and other
procedures that are designed to ensure that information required to be disclosed
in our reports filed or submitted under the Exchange Act is recorded, processed,
summarized and reported, within the time periods specified in the SECs rules
and forms. Disclosure controls and procedures include, without limitation,
controls and procedures designed to ensure that information required to be
disclosed in our reports filed under the Exchange Act is accumulated and
communicated to management, including our Principal Executive Officer and our
Principal Accounting Officer, to allow timely decisions regarding required
disclosure. However, a control system, no matter how well conceived and
operated, can provide only reasonable, but not absolute, assurance that the
objectives of the control system are met.

- 23 -

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During the fiscal quarter ended March 31, 2008, there were no
changes in our internal control over financial reporting that have materially
affected, or are reasonably likely to affect, our internal control over
financial reporting.

- 24 -

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PART II  OTHER INFORMATION

Item
1.           Legal Proceedings

We currently are not a party to any material legal proceedings
and, to our knowledge, no such proceedings are threatened or contemplated.

Item 1A.        Risk
Factors

Not Applicable.

Item
2.           Unregistered
Sales of Equity Securities

Previously disclosed in filings with the SEC.

Item
3.           Defaults Upon
Senior Securities

None.

Item
4.           Submission of
Matters to a Vote of Security Holders

None.

Item
5.           Other
Information

None.

Item
6.           Exhibits

The following exhibits are included with this Quarterly Report
on Form 10-Q:

|Exhibit |                                                                                                                                                                                                                                                          
|------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Number  | Description of
      Exhibit                                                                                                                                                                                                                             
|        |                                                                                                                                                                                                                                                          
|3.1     | Articles of Incorporation, as amended. Incorporated by
      reference to our Current Report on Form 8-K/A filed on August 8, 2007.                                                                                                                      
|        |                                                                                                                                                                                                                                                          
|3.2     | Bylaws. Incorporated by reference to our Registration
      Statement on Form SB-2 filed December 9, 2004.                                                                                                                                               
|        |                                                                                                                                                                                                                                                          
|10.1    | Amending Agreement to Business Combination Agreement
      among ST Online Corp., Park Place Energy Inc. and 0794403 B.C. Ltd dated
      effective July 4, 2007. Incorporated by reference to our Current Report on
      Form 8-K filed July 19, 2007. 
|        |                                                                                                                                                                                                                                                          
|10.2    | Amending Agreement to Business Combination Agreement
      among ST Online Corp., Park Place Energy Inc. and 0794403 B.C. Ltd dated
      effective July 18, 2007. Incorporated by reference to our Current Report
      on Form 8-K filed July 19, 2007.

- 25 -

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|Exhibit |                                                                                                                                                                                                                                                                                                                     
|------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Number  | Description of Exhibit                                                                                                                                                                                                                                                                                              
|        |                                                                                                                                                                                                                                                                                                                     
|10.3    | Reorganization
        Asset and Share Purchase and Sale Agreement, dated effective July 30,
        2007, among Park Place Energy Corp., Scott Pedersen, David Stadnyk and
        Elena Avdasseva. Incorporated by reference to our Current Report on Form
        8-K filed August 14, 2007.                     
|        |                                                                                                                                                                                                                                                                                                                     
|10.4    | Loan Agreement
        dated August 8, 2007 between Park Place Energy Inc. and Great Northern
        Oil Sands Inc. Incorporated by reference to our Current Report on Form
        8-K filed August 14, 2007.                                                                                                     
|        |                                                                                                                                                                                                                                                                                                                     
|10.5    | Debt Settlement
        Agreement, dated August 9, 2007 among Park Place Energy Corp., Park Place
        Energy Inc. and 1284810 Alberta Ltd. Incorporated by reference to our
        Current Report on Form 8-K filed August 14, 2007.                                                                           
|        |                                                                                                                                                                                                                                                                                                                     
|10.6    | Amended and
        Restated Reorganization Asset and Share Purchase and Sale Agreement, dated
        effective July 30, 2007, among Park Place Energy Corp., Scott Pedersen,
        David Stadnyk and Elena Avdasseva. Incorporated by reference to our Current
        Report on Form 8-K filed August 17, 2007.
|        |                                                                                                                                                                                                                                                                                                                     
|31.1    | Rule
        13a-14(a)/15(d)-14(a) Certification of Principal Executive Officer and
        Principal Financial Officer.                                                                                                                                                                                            
|        |                                                                                                                                                                                                                                                                                                                     
|32.1    | 18
        U.S.C. Section 1350 Certification of Principal Executive Officer and Principal
        Financial Officer.                                                                                                                                                                                                

- 26 -

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.

|                    | PARK PLACE ENERGY CORP.              
|------------------- | -------------------------------------
|                    |                                      
|                    |                                      
|                    | /s/ Eric
      M. Leslie             
|                    | Eric M. Leslie                       
|                    | President and Chief Executive Officer
|                    |                                      
|Dated: May 14, 2008 |                                      

---