---

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, 2011

[ ] TRANSITION REPORT UNDER 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 small business issuer as specified in its charter)

|Nevada                                                               | 71-0971567                          
|-------------------------------------------------------------------- | ------------------------------------
|(State or other jurisdiction of incorporation or
      organization) | (I.R.S. Employer Identification No.)

|300-840 6thAvenue SW                     |           
|---------------------------------------- | ----------
|Calgary, Alberta, Canada                 | T2P 3E5   
|(Address of principal executive offices) | (Zip Code)

(403) 360-5375Registrants telephone number,
including area code

N/A(Former name, former address and former
fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the 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 has submitted
electronically and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation
S-T during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files).     
Yes [ ]     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, non-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 ]

State the number of shares outstanding of each of the issuers
classes of common equity, as of the latest practicable date. 5,598,909 shares of
common stock as of May 13, 2011.

---

|PARK PLACE ENERGY CORP.       
|------------------------------
|                              
|Quarterly Report On Form 10-Q 
|For The Quarterly Period Ended
|March 31, 2011                
|                              
|INDEX                         

|PART I  FINANCIAL INFORMATION | 4       
|------------------------------ | --------
|                               | Item 1. 
|                               | Item 2. 
|                               | Item 3. 
|                               | Item 4. 
|                               |         
|PART II  OTHER INFORMATION    | 23      
|                               | Item 1. 
|                               | Item 1A.
|                               | Item 2. 
|                               | Item 3. 
|                               | Item 4. 
|                               | Item 5. 
|                               | Item 6. 

---

FORWARD-LOOKING STATEMENTS

This quarterly report on Form 10-Q contains forward-looking
statements that involve risks and uncertainties. Forward-looking statements in
this quarterly report include, among others, statements regarding our capital
needs, business plans and expectations. Such forward-looking statements include,
but are not limited to, statements with respect to the following:

- our need for additional financing;
- our exploration activities may not result in commercially exploitable
  quantities of oil and gas on our properties;
- the risks inherent in the exploration for oil and gas such as weather,
  accidents, equipment failures and governmental restrictions;
- our limited operating history;
- our history of operating losses;
- the potential for environmental damage;
- our lack of insurance coverage;
- the competitive environment in which we operate;
- the level of government regulation, including environmental regulation;
- changes in governmental regulation and administrative practices;
- our dependence on key personnel;
- conflicts of interest of our directors and officers;
- our ability to fully implement our business plan;
- our ability to effectively manage our growth; and
- other regulatory, legislative and judicial developments.

Forward-looking statements are made, without limitation, in
relation to operating plans, property exploration and development, availability
of funds, environmental reclamation, operating costs and permit acquisition. Any
statements contained herein that are not statements of historical facts 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. Actual events or results may differ materially. In evaluating these
statements, you should consider various factors, including the risks outlined in
our annual report on Form 10-K for the year ended December 31, 2009, this
quarterly report on Form 10-Q, and, from time to time, in other reports that we
file with the Securities and Exchange Commission (the SEC). These factors may
cause our actual results to differ materially from any forward-looking
statement. Given these uncertainties, readers are cautioned not to place undue
reliance on such forward-looking statements.

---

PART I  FINANCIAL INFORMATION

Item 1. Financial Statements

The following unaudited interim financial statements of Park
Place Energy Corp.(sometimes referred to as we, us or our Company) are
included in this quarterly report on Form 10-Q:

|                                                                               | Page
|------------------------------------------------------------------------------ | ----
|Consolidated
      Balance Sheets                                              | 5   
|Consolidated
      Statements of Operations and Deficit and Comprehensive Loss | 6   
|Consolidated
      Statement of Stockholders Equity (Deficiency)              | 7   
|Consolidated
      Statements of Cash Flows                                    | 8   
|Notes
      to the Consolidated Financial Statements                           | 9   

---

|PARK PLACE ENERGY CORP.        
|-------------------------------
|CONSOLIDATED BALANCE SHEETS    
|(An Exploration Stage Company) 
|(Expressed in Canadian Dollars)
|(Unaudited)                    

|                                                                                                                     |   |             |   |   |              |  
|-------------------------------------------------------------------------------------------------------------------- | - | ----------- | - | - | ------------ | -
|                                                                                                                     |   | March 31,   |   |   | December 31, |  
|                                                                                                                     |   | 2011        |   |   | 2010         |  
|                                                                                                                     |   |             |   |   |              |  
|                                                                                                                     |   |             |   |   |              |  
|                                                                                                                     |   |             |   |   |              |  
|ASSETS                                                                                                               |   |             |   |   |              |  
|                                                                                                                     |   |             |   |   |              |  
|Current                                                                                                              |   |             |   |   |              |  
|Cash                                                                                                                 | $ | 1,877       |   | $ | 22           |  
|Receivables                                                                                                          |   | 6,087       |   |   | 5,680        |  
|Prepaid expenses                                                                                                     |   | 1,270       |   |   | 2,204        |  
|                                                                                                                     |   |             |   |   |              |  
|Total current assets                                                                                                 |   | 9,234       |   |   | 7,906        |  
|                                                                                                                     |   |             |   |   |              |  
|Fixed assets                                                                                                         |   |             |   |   |              |  
|Property and equipment, net                                                                                          |   | 7,360       |   |   | 7,829        |  
|                                                                                                                     |   |             |   |   |              |  
|Oil and gas properties(Note 3)                                                                                       |   | 76,691      |   |   | 76,860       |  
|                                                                                                                     |   |             |   |   |              |  
|Total assets                                                                                                         | $ | 93,285      |   | $ | 92,595       |  
|                                                                                                                     |   |             |   |   |              |  
|                                                                                                                     |   |             |   |   |              |  
|                                                                                                                     |   |             |   |   |              |  
|LIABILITIES AND STOCKHOLDERS' EQUITY                                                                                 |   |             |   |   |              |  
|                                                                                                                     |   |             |   |   |              |  
|Current liabilities                                                                                                  |   |             |   |   |              |  
|Accounts payable and accrued
      liabilities                                                                       | $ | 91,984      |   | $ | 169,835      |  
|Loan payable
      (Note 4)                                                                                          |   | 81,500      |   |   | -            |  
|                                                                                                                     |   |             |   |   |              |  
|Total current liabilities                                                                                            |   | 173,484     |   |   | 169,835      |  
|                                                                                                                     |   |             |   |   |              |  
|Stockholders' equity                                                                                                 |   |             |   |   |              |  
|Common stock (Note 5)                                                                                                |   |             |   |   |              |  
|Authorized
                        
      40,000,000 par value $0.00001                                              |   |             |   |   |              |  
|Issued
      and outstanding
                         
      5,598,909 common shares (December 31, 2010  5,598,909) |   | 56          |   |   | 56           |  
|Additional
      paid-in capital (Note 5)                                                                            |   | 11,571,924  |   |   | 11,571,924   |  
|Accumulated other comprehensive
      income                                                                         |   | 228,535     |   |   | 228,480      |  
|Deficit
      accumulated during the exploration stage                                                               |   | (11,880,714 | ) |   | (11,877,700  | )
|                                                                                                                     |   |             |   |   |              |  
|Total stockholders equity                                                                                           |   | (80,199     | ) |   | (77,240      | )
|                                                                                                                     |   |             |   |   |              |  
|Total liabilities and stockholders equity                                                                           | $ | 93,285      |   | $ | 92,595       |  

Nature and continuance of operations(Note 1)

Subsequent events(Note 10)

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

---

|PARK PLACE ENERGY CORP.                                           
|------------------------------------------------------------------
|CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE
      LOSS
|(An Exploration Stage Company)                                    
|(Expressed in Canadian Dollars)                                   
|(Unaudited)                                                       

|                                                                        |   |                |   |   |              |   |   |              |  
|----------------------------------------------------------------------- | - | -------------- | - | - | ------------ | - | - | ------------ | -
|                                                                        |   | Cumulative     |   |   |              |   |   |              |  
|                                                                        |   | Amounts        |   |   |              |   |   |              |  
|                                                                        |   | From Inception |   |   | Three Months |   |   | Three Months |  
|                                                                        |   | May 4, 2006 to |   |   | Ended        |   |   | Ended        |  
|                                                                        |   | March 31,      |   |   | March 31,    |   |   | March 31,    |  
|                                                                        |   | 2011           |   |   | 2011         |   |   | 2010         |  
|                                                                        |   |                |   |   |              |   |   |              |  
|REVENUE                                                                 |   |                |   |   |              |   |   |              |  
|Oil and gas                                                             | $ | 1,619,047      |   | $ | -            |   | $ | -            |  
|                                                                        |   |                |   |   |              |   |   |              |  
|DIRECT COSTS                                                            |   |                |   |   |              |   |   |              |  
|Depletion                                                               |   | 1,235,574      |   |   | -            |   |   | -            |  
|Operating expenses                                                      |   | 1,140,050      |   |   | -            |   |   | -            |  
|                                                                        |   |                |   |   |              |   |   |              |  
|                                                                        |   | (756,577       | ) |   | -            |   |   | -            |  
|EXPENSES                                                                |   |                |   |   |              |   |   |              |  
|Office and general                                                      |   | 731,125        |   |   | 8,534        |   |   | 24,461       |  
|Depreciation                                                            |   | 4,518          |   |   | 469          |   |   | 299          |  
|Exploration expenses                                                    |   | 308,534        |   |   | -            |   |   | -            |  
|Foreign exchange loss                                                   |   | 122,046        |   |   | 860          |   |   | 2,236        |  
|Professional fees                                                       |   | 919,702        |   |   | (544         | ) |   | 20,047       |  
|Consulting                                                              |   | 1,872,262      |   |   | 6,571        |   |   | 83,876       |  
|Investor relations                                                      |   | 884,140        |   |   | 102          |   |   | 4,285        |  
|Management fees                                                         |   | 631,638        |   |   | -            |   |   | -            |  
|Travel                                                                  |   | 192,719        |   |   | -            |   |   | -            |  
|Stock-based
      compensation (Note 5)                                 |   | 2,004,083      |   |   | -            |   |   | 163,000      |  
|                                                                        |   |                |   |   |              |   |   |              |  
|                                                                        |   | (7,670,767     | ) |   | (15,992      | ) |   | (298,204     | )
|                                                                        |   |                |   |   |              |   |   |              |  
|Loss before other items and income
      taxes                          |   | (8,427,344     | ) |   | (15,992      | ) |   | (298,204     | )
|                                                                        |   |                |   |   |              |   |   |              |  
|OTHER ITEMS                                                             |   |                |   |   |              |   |   |              |  
|Interest and other revenue                                              |   | 122,683        |   |   | 12,978       |   |   | 23,691       |  
|Gain on sale of
      oil and gas properties                            |   | 381,166        |   |   | -            |   |   | -            |  
|Gain on sale of the marketable
      securities                         |   | 4,635          |   |   | -            |   |   | -            |  
|Loss on sale of
      disposal of properties                            |   | (53,869        | ) |   | -            |   |   | -            |  
|Loss on write-down of promissory note                                   |   | (254,997       | ) |   | -            |   |   | -            |  
|Gain on settlement of
      debt                                        |   | 341,777        |   |   | -            |   |   | -            |  
|Write off oil and gas costs and
      exploration advances              |   | (4,244,676     | ) |   | -            |   |   | -            |  
|                                                                        |   |                |   |   |              |   |   |              |  
|Loss before income tax                                                  |   | (12,130,625    | ) |   | (3,014       | ) |   | (274,513     | )
|                                                                        |   |                |   |   |              |   |   |              |  
|Future income tax recovery                                              |   | 291,060        |   |   | -            |   |   | -            |  
|                                                                        |   |                |   |   |              |   |   |              |  
|Net loss for the period                                                 |   | (11,839,565    | ) |   | (3,014       | ) |   | (274,513     | )
|                                                                        |   |                |   |   |              |   |   |              |  
|OTHER COMPREHENSIVE INCOME                                              |   |                |   |   |              |   |   |              |  
|Foreign currency
      translation adjustment                           |   | 237,861        |   |   | 55           |   |   | (3,093       | )
|                                                                        |   |                |   |   |              |   |   |              |  
|COMPREHENSIVE LOSS                                                      | $ | (11,601,704    | ) | $ | (2,959       | ) | $ | (277,606     | )
|                                                                        |   |                |   |   |              |   |   |              |  
|Basic and diluted loss per share                                        |   |                |   | $ | (0.00        | ) | $ | (0.08        | )
|                                                                        |   |                |   |   |              |   |   |              |  
|Weighted average number of shares outstanding 
      basic and diluted |   |                |   |   | 5,598,909    |   |   | 3,314,467    |  

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

---

|PARK PLACE ENERGY CORP.                       
|----------------------------------------------
|CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY
|(An Exploration Stage Company)                
|(Expressed in Canadian Dollars)               
|(Unaudited)                                   

|                                                     |  |              |  |   |        |   |   |            |   |   |               |   |   |             |  
|---------------------------------------------------- |  | ------------ |  | - | ------ | - | - | ---------- | - | - | ------------- | - | - | ----------- | -
|                                                     |  | Common Stock |  |   |        |   |   |            |   |   |               |   |   |             |  
|                                                     |  |              |  |   |        |   |   |            |   |   |               |   |   | Deficit     |  
|                                                     |  |              |  |   |        |   |   |            |   |   | Accumulated   |   |   | Accumulated |  
|                                                     |  |              |  |   |        |   |   | Additional |   |   | Other         |   |   | During the  |  
|                                                     |  | Number of    |  |   |        |   |   | Paid-In    |   |   | Comprehensive |   |   | Exploration |  
|                                                     |  | Shares       |  |   | Amount |   |   | Capital    |   |   | Income        |   |   | Stage       |  
|                                                     |  |              |  |   |        |   |   |            |   |   |               |   |   |             |  
|December 31, 2007                                    |  | 1,100,011    |  | $ | 330    |   | $ | 7,932,363  |   | $ | 114,837       |   | $ | (4,594,798  | )
|                                                     |  |              |  |   |        |   |   |            |   |   |               |   |   |             |  
|Issuance of common stock for cash                    |  | 784,071      |  |   | 235    |   |   | 1,983,713  |   |   | -             |   |   | -           |  
|Issuance of common stock in settlement of debt       |  | 71,429       |  |   | 21     |   |   | 149,979    |   |   | -             |   |   | -           |  
|Issuance of common stock for consulting              |  | 183,333      |  |   | 56     |   |   | 560,702    |   |   | -             |   |   | -           |  
|Stock-based compensation                             |  | -            |  |   | -      |   |   | 310,444    |   |   | -             |   |   | -           |  
|Share issuance costs                                 |  | -            |  |   | -      |   |   | (69,465    | ) |   | -             |   |   | -           |  
|Cumulative translation adjustment                    |  | -            |  |   | -      |   |   | -          |   |   | 79,005        |   |   | -           |  
|Net loss                                             |  | -            |  |   | -      |   |   | -          |   |   | -             |   |   | (5,195,292  | )
|                                                     |  |              |  |   |        |   |   |            |   |   |               |   |   |             |  
|December 31, 2008                                    |  | 2,138,844    |  | $ | 642    |   | $ | 10,867,736 |   | $ | 193,842       |   | $ | (9,790,090  | )
|                                                     |  |              |  |   |        |   |   |            |   |   |               |   |   |             |  
|Issuance of common stock for cash                    |  | 155,000      |  |   | 46     |   |   | 92,390     |   |   | -             |   |   | -           |  
|Cumulative translation adjustment                    |  | -            |  |   | -      |   |   | -          |   |   | 35,602        |   |   | -           |  
|Stock-based compensation                             |  | -            |  |   | -      |   |   | 109,806    |   |   | -             |   |   | -           |  
|Net loss                                             |  | -            |  |   | -      |   |   | -          |   |   | -             |   |   | (1,806,007  | )
|                                                     |  |              |  |   |        |   |   |            |   |   |               |   |   |             |  
|December 31, 2009                                    |  | 2,293,844    |  | $ | 688    |   | $ | 11,069,932 |   | $ | 229,444       |   | $ | (11,596,097 | )
|                                                     |  |              |  |   |        |   |   |            |   |   |               |   |   |             |  
|Issuance of common stock for cash                    |  | 1,296,311    |  |   | 399    |   |   | 120,088    |   |   | -             |   |   | -           |  
|Issuance of common stock in settlement of
      debt |  | 1,638,754    |  |   | 518    |   |   | 125,670    |   |   | -             |   |   | -           |  
|Issuance of common stock for consulting              |  | 370,000      |  |   | 111    |   |   | 184,519    |   |   | -             |   |   | -           |  
|Stock-based compensation                             |  | -            |  |   | -      |   |   | 59,129     |   |   | -             |   |   | -           |  
|Cumulative translation adjustment                    |  | -            |  |   | -      |   |   | -          |   |   | (964          | ) |   | -           |  
|Warrants                                             |  | -            |  |   | -      |   |   | 10,926     |   |   | -             |   |   | -           |  
|Adjustment for par value                             |  | -            |  |   | (1,660 | ) |   | 1,660      |   |   | -             |   |   | -           |  
|Net loss                                             |  | -            |  |   | -      |   |   | -          |   |   | -             |   |   | (281,603    | )
|                                                     |  |              |  |   |        |   |   |            |   |   |               |   |   |             |  
|December 31, 2010                                    |  | 5,598,909    |  | $ | 56     |   | $ | 11,571,924 |   | $ | 228,480       |   | $ | (11,877,700 | )
|                                                     |  |              |  |   |        |   |   |            |   |   |               |   |   |             |  
|Cumulative translation adjustment                    |  | -            |  |   | -      |   |   | -          |   |   | 55            |   |   | -           |  
|Net loss                                             |  | -            |  |   | -      |   |   | -          |   |   | -             |   |   | (3,014      | )
|                                                     |  |              |  |   |        |   |   |            |   |   |               |   |   |             |  
|March 31, 2011                                       |  | 5,598,909    |  | $ | 56     |   | $ | 11,571,924 |   | $ | 228,535       |   | $ | (11,880,714 | )

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

---

|PARK PLACE ENERGY CORP.              
|-------------------------------------
|(An Exploration Stage Company)       
|CONSOLIDATED STATEMENTS OF CASH FLOWS
|(Expressed in
      Canadian Dollars)

|                                                    |   |                    |   |   |              |   |   |              |  
|--------------------------------------------------- | - | ------------------ | - | - | ------------ | - | - | ------------ | -
|                                                    |   | Cumulative Amounts |   |   |              |   |   |              |  
|                                                    |   | From Inception     |   |   | Three Months |   |   | Three Months |  
|                                                    |   | May 4, 2006 to     |   |   | Ended        |   |   | Ended        |  
|                                                    |   | March 31,          |   |   | March 31,    |   |   | March 31,    |  
|                                                    |   | 2011               |   |   | 2011         |   |   | 2010         |  
|                                                    |   |                    |   |   |              |   |   |              |  
|CASH FLOW FROM OPERATING ACTIVITIES                 |   |                    |   |   |              |   |   |              |  
|Loss for the period                                 | $ | (11,839,565        | ) | $ | (3,014       | ) | $ | (274,513     | )
|Depreciation                                        |   | 4,518              |   |   | 469          |   |   | 299          |  
|Stock-based compensation                            |   | 2,004,083          |   |   | -            |   |   | 163,000      |  
|Warrants
      issued for consulting services       |   | 10,926             |   |   | -            |   |   | -            |  
|Interest accrued on notes
      payable             |   | 12,530             |   |   | -            |   |   | -            |  
|Impairment of oil and gas                           |   | 2,924,647          |   |   | -            |   |   | -            |  
|Gain on sale of oil and
      gas interest          |   | (381,166           | ) |   | -            |   |   | -            |  
|Debt paid
      by issuance of common stock         |   | 376,049            |   |   | -            |   |   | -            |  
|Gain on sale of
      marketable securities         |   | (4,635             | ) |   | -            |   |   | -            |  
|Gain on
      settlement of debt                    |   | (341,777           | ) |   | -            |   |   | -            |  
|Write off of exploration
      advances             |   | 37,558             |   |   | -            |   |   | -            |  
|Investor
      relation and consulting fees paid by |   |                    |   |   | -            |   |   | -            |  
|issuance of common stock                            |   | 508,785            |   |   | -            |   |   | -            |  
|Depletion                                           |   | 1,235,574          |   |   | -            |   |   | -            |  
|Future income tax
      recovery                    |   | (291,060           | ) |   | -            |   |   | -            |  
|Changes in non-cash working
      capital items:    |   |                    |   |   |              |   |   |              |  
|Decrease (increase) in
      receivables            |   | (6,087             | ) |   | (407         | ) |   | (4,342       | )
|Decrease
      (increase) in prepaid expenses       |   | (1,310             | ) |   | 934          |   |   | (3,263       | )
|Decrease (increase) in
      accounts payable and   |   |                    |   |   |              |   |   |              |  
|accrued
      liabilities                           |   | 937,815            |   |   | (76,637      | ) |   | 136,252      |  
|Increase (decrease) in
      due to related parties |   | 65,449             |   |   | -            |   |   | (48,513      | )
|                                                    |   |                    |   |   |              |   |   |              |  
|Net cash used in operating activities               |   | (4,747,666         | ) |   | (78,655      | ) |   | (31,080      | )
|                                                    |   |                    |   |   |              |   |   |              |  
|CASH FLOW FROM INVESTING ACTIVITIES                 |   |                    |   |   |              |   |   |              |  
|Oil and gas interests                               |   | (3,741,761         | ) |   | -            |   |   | -            |  
|Proceeds from oil and gas properties                |   | 50,000             |   |   | -            |   |   | -            |  
|Proceeds from sale of
      marketable securities   |   | 79,635             |   |   | -            |   |   | -            |  
|Exploration advances                                |   | (270,919           | ) |   | -            |   |   | (36,172      | )
|Loan payable                                        |   | (572,000           | ) |   | -            |   |   | -            |  
|Cash acquired through recapitalization              |   | 320                |   |   | -            |   |   | -            |  
|Acquisition of property and
      equipment         |   | (11,878            | ) |   | -            |   |   | -            |  
|                                                    |   |                    |   |   |              |   |   |              |  
|Net cash used in investing activities               |   | (4,466,603         | ) |   | -            |   |   | (36,172      | )
|                                                    |   |                    |   |   |              |   |   |              |  
|CASH FLOW FROM FINANCING ACTIVITIES                 |   |                    |   |   |              |   |   |              |  
|Proceeds from issuance of capital stock             |   | 8,287,009          |   |   | -            |   |   | 66,883       |  
|Proceeds from loans                                 |   | 706,500            |   |   | 81,500       |   |   | -            |  
|Repurchase of common stock                          |   | (15,028            | ) |   | -            |   |   | -            |  
|                                                    |   |                    |   |   |              |   |   |              |  
|Net cash provided by financing activities           |   | 8,978,481          |   |   | 81,500       |   |   | 92,414       |  
|                                                    |   |                    |   |   |              |   |   |              |  
|Effect of foreign exchange on cash                  |   | 237,665            |   |   | 990          |   |   | (3,093       | )
|                                                    |   |                    |   |   |              |   |   |              |  
|Change in cash during the period                    |   | 1,877              |   |   | 1,855        |   |   | (3,462       | )
|                                                    |   |                    |   |   |              |   |   |              |  
|Cash position, beginning of period                  |   | -                  |   |   | 22           |   |   | 4,414        |  
|                                                    |   |                    |   |   |              |   |   |              |  
|Cash position,
      end of period                  | $ | 1,877              |   | $ | 1,877        |   | $ | 952          |  

Supplemental disclosure with respect
to cash flows(Note 6)

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

---

|PARK PLACE ENERGY CORP.                       
|----------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|(An Exploration Stage Company)                
|(Expressed in Canadian Dollars)               
|MARCH 31, 2011                                
|(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. On August 31, 2009, the Company affected a forward split of
      its shares of common stock on a one old share for ten new shares basis on
      that date and increased the authorized share capital from 1,200,000,000
      shares of common stock to 12,000,000,000 shares of common stock.
      Subsequent to December 31, 2009, the Company affected a reverse stock
      split of its common shares on a three hundred old shares for one new share
      basis, decreasing the authorized share capital from 12,000,000,000 common
      shares to 40,000,000 common shares. All references to number of shares
      outstanding, earnings per share, stock options and warrants have been
      adjusted to reflect the above mentioned stock splits.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | On July 30, 2007, the Company acquired Park Place Energy
      Inc. which was renamed to Park Place Energy (Canada) Inc. (Park Place
      Canada) on September 14, 2007. The business of the Company is now the
      acquisition and exploration of oil and gas properties. Park Place Energy
      Corp. held exploration interests in a property in Tennessee, USA. Park
      Place Canada holds the exploration interests in three properties in the
      provinces of British Columbia and Alberta, in Canada. 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | On November 22, 2007 a new private company, Park Place
      Energy (International) Inc. (Park Place International) was incorporated
      under the laws of British Columbia, Canada. This company is a wholly owned
      subsidiary of Park Place Energy Corp.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | On July 24, 2008, the Company acquired the interest in
      certain 5 Year Northern Petroleum and Natural Gas Leases located in
      Alberta, Canada. The Company sold this interest on April 6, 2010 for
      consideration of $50,000.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | These consolidated 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 had a history of negative cash flows from operating
      activities. In addition, the Company has an accumulated deficit of
      $11,880,714 as of March 31, 2011. These considerations raise substantial
      doubt about the Companys ability to continue as 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. 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

---

|PARK PLACE ENERGY CORP.                       
|----------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|(An Exploration Stage Company)                
|(Expressed in Canadian Dollars)               
|MARCH 31, 2011                                
|(Unaudited)                                   
|                                              

|2. | SUMMARY OF SIGNIFICANT ACCOUNTING
  POLICIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | Recent accounting pronouncements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | In February 2010, the FASB issued Accounting Standards
      Update ASU 2010-09, Subsequent Events (Topic 855), amending ASC 855. ASU
      2010-09 removes the requirement for an SEC filer to disclose a date
      relating to its subsequent events in both issued and revised financial
      statements. ASU 2010-09 also eliminates potential conflicts with the SECs
      literature. Most of ASU 2010-09 is effective upon issuance of the update.
      The adoption of this standard did not have a material impact on the
      Companys financial position or results of operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | In January 2010, the FASB issued ASU 2010-06, Fair Value
      Measurements and Disclosures (Topic 820), Improving Disclosures about Fair
      Value Measurements, amending ASC 820. ASU 2010-06 requires entities to
      provide new disclosures and clarify existing disclosures relating to fair
      value measurements. The new disclosures and clarifications of existing
      disclosures are effective for interim and annual reporting periods
      beginning after December 15, 2009, except for the disclosures about
      purchases, sales, issuances, and settlements in Level 3 fair value
      measurements, which are effective for fiscal years beginning after
      December 15, 2010 and for interim periods within those fiscal years. The
      adoption of this standard did not have a material impact on the Companys
      financial position or results of operations.                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | In June 2009, the FASB issued ASC 810, which revised the
      consolidation guidance for variable interest entities. The amendments
      include: (1) the elimination of the exemption for qualifying special
      purpose entities, (2) a new approach for determining who should
      consolidate a variable-interest entity, and (3) changes to when it is
      necessary to reassess who should consolidate a variable-interest entity.
      ASC 810 is effective for the first annual reporting period beginning after
      November 15, 2009 and for interim periods within that first annual
      reporting period. The Company adopted FASB ASC 810 and the adoption of
      this standard had no material impact on our financial statements for the
      three month period ended March 31, 2011.                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | In September 2009, the FASB issued authoritative guidance
      regarding multiple-deliverable revenue arrangements. This guidance
      addresses how to separate deliverables and how to measure and allocate
      consideration to one or more units of accounting. Specifically, the
      guidance requires that consideration be allocated among multiple
      deliverables based on relative selling prices. The guidance establishes a
      selling price hierarchy of (1) vendor specific objective evidence, (2)
      third-party evidence and (3) estimated selling price. This guidance is
      effective for annual periods beginning after June 15, 2010 but may be
      early adopted as of the beginning of an annual period. The Company is
      currently evaluating the effect that this guidance will have on its
      consolidated financial position and results of operations but does not
      expect its adoption to have a material impact on the Companys financial
      reporting and disclosures.                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | In July 2010, the FASB issued an Accounting Standards
      Update No. 2010-20, Receivables, Disclosure about the Credit Quality of
      Financing Receivables and Allowances for Credit Losses. The standard
      requires additional disclosure related to the credit quality of financing
      receivables, troubled debt restructurings and significant purchases or
      sales of financing receivables during the period. The standard requires
      that these disclosures and existing disclosures be presented on a
      disaggregated basis, similar to the manner that the entity uses to
      evaluate its credit losses. Disclosures of information as of the end of a
      reporting period are effective for interim and annual periods ending after
      December 15, 2010, and disclosures of activity that occurred during a
      reporting period are effective for interim and annual periods beginning after
      December 15, 2010. The Company has adopted this standard on January 1,
      2010, and it will have no impact on our consolidated financial statements
      for the three month period ended March 31, 2011, due to the receivables
      being short-term in nature and are therefore not financing
    receivables.

---

|PARK PLACE ENERGY CORP.                       
|----------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|(An Exploration Stage Company)                
|(Expressed in Canadian Dollars)               
|MARCH 31, 2011                                
|(Unaudited)                                   
|                                              

|2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | Recent accounting pronouncements(contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | In December 2010, the FASB issued ASU 2010-29, which
      contains updated accounting guidance to clarify the acquisition date that
      should be used for reporting pro forma financial information when
      comparative financial statements are issued. This update requires that a
      company should disclose revenue and earnings of the combined entity as
      though the business combination(s) that occurred during the current year
      had occurred as of the beginning of the comparable prior annual reporting
      period only. This update also requires disclosure of the nature and amount
      of material, nonrecurring pro forma adjustments. The provisions of this
      update, which are to be applied prospectively, are effective for business
      combinations for which the acquisition date is on or after the beginning
      of the first annual reporting period beginning on or after December 15,
      2010, with early adoption permitted. The impact of this update on the
      Companys consolidated financial statements will depend on the size and
      nature of future business combinations.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|3. | OIL AND GAS PROPERTIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

| |                                      |   |           |  |   |              | 
| | ------------------------------------ | - | --------- |  | - | ------------ | 
| |                                      |   | As at     |  |   | As at        | 
| |                                      |   | March 31, |  |   | December 31, | 
| |                                      |   | 2011      |  |   | 2010         | 
| | OIL AND GAS INTERESTS                |   |           |  |   |              | 
| | Unproven Properties                  |   |           |  |   |              | 
| | Canada                               | $ | 76,691    |  | $ | 76,860       | 
| | Total Unproved Properties            | $ | 76,691    |  | $ | 76,860       | 
| | Total Proven and Unproved Properties | $ | 76,691    |  | $ | 76,860       | 

---

|PARK PLACE ENERGY CORP.                       
|----------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|(An Exploration Stage Company)                
|(Expressed in Canadian Dollars)               
|MARCH 31, 2011                                
|(Unaudited)                                   
|                                              

|3. | OIL AND GAS PROPERTIES(contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | On January 28, 2010, the Company bought a 50% interest in
      an oil and gas exploration property located in Saskatchewan, Canada by
      issuing a US$150,000 note payable. This note payable was later settled by
      issuing 500,000 common shares of the company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | On May 11, 2010, the Company assigned one-half of its 50%
      working interest in its Saskatchewan oil and gas property to a privately
      held exploration company. As consideration for the assignment, the Company
      received 750,000 shares of the private company. As the shares had no
      active market they were valued based on the consideration given up, US
      $75,000.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | On October 12, 2010 the Bulgarian Council of Ministers
      granted to the Company a permit for the exploration and prospecting of oil
      and natural gas properties known as the Vranino Blocks.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | On October 25, 2010 an appeal against the Bulgarian
      Council of Ministers decision to award the Vranino Block to Park Place was
      filed with the Supreme Administrative Court of Bulgaria.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|4. | LOAN PAYABLE                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | The Company has received a refundable $81,500 of a
      $150,000 convertible promissory note. The terms of the note are currently
      under negotiations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|5. | COMMON STOCK                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | On 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.
      On August 31, 2009, the Company affected a forward split of its shares of
      common stock on a one (1) old share for ten (10) new shares on that date
      and increased the authorized share capital from 1,200,000,000 shares of
      common stock to 12,000,000,000 shares of common stock. Subsequent to
      December 31, 2009, the Company affected a reverse stock split of its
      common shares on a three hundred old shares for one new share basis,
      decreasing the authorized share capital from 12,000,000,000 common shares
      to 40,000,000 common shares. 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 14, 2008, the Company issued 147,857 units at
      a price of US$2.10 for gross proceeds of US$310,500. Each unit contained
      one share of common stock and one warrant exercisable at US$3.00 during
      the first year and US$4.50 in the second year.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | On February 26, 2008, the Company issued 25,000 shares of
      common stock for consulting services at a value of US$3.00 per
    share.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | On March 3, 2008, the Company issued 284,548 units at a
      price of US$2.10 for gross proceeds of US$597,550. Each unit contained one
      share of common stock and one warrant exercisable at US$3.00 during the
      first year and US$6.00 in the second year.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          

---

|PARK PLACE ENERGY CORP.                       
|----------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|(An Exploration Stage Company)                
|(Expressed in Canadian Dollars)               
|MARCH 31, 2011                                
|(Unaudited)                                   
|                                              

|5. | COMMON STOCK(contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | On March 6, 2008, the Company issued 71,429 units at a
      price of US$2.10 to the holders of the loan payable as outlined in Note
      4. Each unit contained one share of common stock and one warrant
      exercisable at US$3.00 during the first year and US$4.50 during the second
      year.                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | In April, 2008, the Company issued 300,000 units at a
      price of US$3.00 per unit for gross proceeds of US$900,000. Each unit
      consisted of one common share and one share purchase warrant entitling the
      holder to purchase a common share up to one year at a price of US$6.00.
      The Company paid a Finders Fee of $45,000 and issued Finders Warrants
      with a fair value of $27,986 to acquire 15,000 common shares of the
      Company at US$3.00 for one year.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | On June 20, 2008, the Company issued 80,000 shares of
      common stock for consulting services at a value of US$2.70 per
    share.                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | On July 3, 2008, the Company issued 49,167 shares of
      common stock at a price of US$3.00 for gross proceeds of US$147,500 and
      2,500 shares of common stock at a price of US$4.50 for gross proceeds of
      US$11,250.                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | On September 8, 2008, the Company issued 20,000 shares of
      common stock for consulting services at a value of US$3.75 per
    share.                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | On September 8, 2008, the Company issued 58,333 shares of
      common stock for consulting services at a value of US$3.00 per
    share.                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | On July 2, 2009, the Company issued 33,330 shares of
      common stock at a price of US$0.30 for gross proceeds of
  US$10,000.                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | On July 16, 2009, the Company issued 44,334 shares of
      common stock at a price of US$0.60 for gross proceeds of
  US$26,600.                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | On July 27, 2009, the Company issued 15,834 shares of
      common stock at a price of US$0.60 for gross proceeds of
  US$9,500.                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | On August 13, 2009, the Company issued 10,918 shares of
      common stock at a price of US$0.60 for gross proceeds of
  US$6,550.                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | On August 18, 2009, the Company issued 50,584 shares of
      common stock at a price of US$0.60 for gross proceeds of
  US$30,350.                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | On January 15, 2010, the Company issued 21,667 common
      shares at a price of US$0.30 on the exercise of options for gross proceeds
      of US$6,500.                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | On January 25, 2010, the Company issued 8,424 common
      shares at a price of US$0.45 on the exercise of options for gross proceeds
      of US$3,971.                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | On January 28, 2010 the Company issued a total of
      1,248,163 common shares at a value of US$0.07 per share for payment of
      outstanding payables of $169,235 (US$154,553), loans payable of $35,000,
      amounts due to related parties of $34,085 (US$32,101) and a note payable
      of $159,270 ($US150,000). A gain of $304,819 (US$287,078) was
    recorded                                                                                                                  

---

|PARK PLACE ENERGY CORP.                       
|----------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|(An Exploration Stage Company)                
|(Expressed in Canadian Dollars)               
|MARCH 31, 2011                                
|(Unaudited)                                   
|                                              

|5. | COMMON STOCK(contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | On February 16, 2010, the Company issued 6,576 common
      shares at a price of US$0.45 and 21,786 of common shares at a price of
      US$0.51 on the exercise of options for gross proceeds of US$2,959 and
      US$11,111.                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | On February 16, 2010 the Company issued 187,857 shares
      and warrants on the close of its unit offering for gross proceeds of US
      $39,450.                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | On March 11, 2010, the Company issued 150,000 common
      shares at a value of US$0.06 in satisfaction of outstanding accounts
      payable of $46,197 (US$45,000). A gain of $ 36,958 (US$36,000) was
      reported as the difference in accounts payable settled and the fair market
      value of shares issued.                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | On March 24, 2010 the Company affected a reverse stock
      split of its common shares on a three hundred old shares for one new share
      basis, decreasing the authorized share capital from 12,000,000,000 common
      shares to 40,000,000 common shares.                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | On August 19, 2010, the Company completed a private
      placement issuing 850,000 common shares at a price of US $0.05 for gross
      proceeds of $42,500. The Company also issued 169,163 shares for the
      settlement of $8,718 (US$8,458) in accounts payable. A stock based
      compensation expense of US $27,066 was recorded for the difference between
      the market value of the Companys shares when issued and the debt
      settlement value.                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | On August 19, 2010, the Company issued 71,428 common
      shares at a price of US$0.21 for settlement of accounts payable of $15,460
      (US$15,000).                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | On November 10, 2010, the Company issued 200,000
      restricted shares at a price of US$0.50 per share to a consultant pursuant
      to the terms of a consulting agreement.                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | On November 10, 2010, the Company issued 170,000
      restricted shares at a price of US$0.50 per share to a consultant pursuant
      to the terms of a consulting agreement.                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | On November 29, 2010, the Company issued 200,000 common
      shares at a price of US$0.05 for gross proceeds of US$10,000.                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | On January 5, 2011 the Company proposed to issue and sell
      by private placement up to 2,857,143 units in the capital of the Company
      at price of $0.07 per share for aggregate gross proceeds of up to
      $200,000. The Company reserved for issuance up to 2,857,143 Warrant
      Shares.                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | 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 a total of 200,000 Common Shares. Under the plan
      the exercise price of each option shall not be less than 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 June 24, 2009 the Company amended the stock option
      plan to increase common shares approved to
216,667.                                                                                                                                                                                                                                                                                                                                                                                      

---

|PARK PLACE ENERGY CORP.                       
|----------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|(An Exploration Stage Company)                
|(Expressed in Canadian Dollars)               
|MARCH 31, 2011                                
|(Unaudited)                                   
|                                              

|5. | COMMON STOCK(contd)
|-- | ---------------------

On January 25, 2010 the Company amended
and restated its 2007 Stock Option Plan to increase the maximum number of common
shares that may be reserved for issuance under the Plan from 216,667 common
shares to 533,333 common shares.

As at March 31, 2011, the Company had
outstanding stock options, enabling the holders to acquire further common shares
as follows:

| |                              |  |                  |  |  |          |  |  |                  | 
| | ---------------------------- |  | ---------------- |  |  | -------- |  |  | ---------------- | 
| |                              |  |                  |  |  | Exercise |  |  |                  | 
| |                              |  | Number           |  |  | Price    |  |  |                  | 
| |                              |  | of
      Options |  |  | (US$)    |  |  | Expiry Date      | 
| |                              |  |                  |  |  |          |  |  |                  | 
| |                              |  | 294,881          |  |  | 0.51     |  |  | January 25, 2012 | 
| | Balance as at March 31, 2011 |  | 294,881          |  |  |          |  |  |                  | 

Stock option transactions are
summarized as follows:

| |                                          |  |           |  |   |              | 
| | ---------------------------------------- |  | --------- |  | - | ------------ | 
| |                                          |  | March 31, |  |   | December 31, | 
| |                                          |  | 2011      |  |   | 2010         | 
| |                                          |  |           |  |   | Weighted     | 
| |                                          |  |           |  |   | Average      | 
| |                                          |  |           |  |   | Exercise     | 
| |                                          |  | Number of |  |   | Price        | 
| |                                          |  | Options   |  |   | (US$)        | 
| | Balance, beginning of the year           |  | 294,881   |  | $ | 0.51         | 
| | Granted                                  |  | -         |  |   | -            | 
| | Exercised                                |  | -         |  |   | -            | 
| | Expired / cancelled                      |  | -         |  |   | -            | 
| | Balance, end of period                   |  | 294,881   |  | $ | 0.51         | 
| | Options
      exercisable, end of period |  | 294,881   |  | $ | 0.51         | 

---

|PARK PLACE ENERGY CORP.                       
|----------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|(An Exploration Stage Company)                
|(Expressed in Canadian Dollars)               
|MARCH 31, 2011                                
|(Unaudited)                                   
|                                              

|5. | COMMON STOCK(contd)                                                                                                                                                                                                                                                               
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                     
|   | During the three month period ended March 31, 2011 the
      Company granted Nil options of common stock (2010  $331,667). The
      weighted average fair value of the options granted during the three month
      period ended March 31, 2011 is $Nil (2010 - $0.62) per option.
|   |                                                                                                                                                                                                                                                                                     
|   | The aggregate intrinsic value for the options vested as
      of March 31, 2011 is approximately $Nil (2010 - $Nil) and for total
      options outstanding is approximately $Nil (2010 - $Nil).                                                                                    
|   |                                                                                                                                                                                                                                                                                     
|   | Options  Stock-Based Compensation                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                     
|   | The following weighted-average assumptions were used for
      the Black-Scholes valuation of stock options granted during the year ended
      December 31:                                                                                                                        

| |                          |  |            | 
| | ------------------------ |  | ---------- | 
| |                          |  | 2010       | 
| |                          |  |            | 
| | Risk-free interest rate  |  | 1.18%      | 
| | Expected life of options |  | 2.00 years | 
| | Annualized volatility    |  | 271.77%    | 
| | Dividend rate            |  | 0.00%      | 

Warrants

As at March 31, 2010, the Company had
outstanding warrants, enabling the holders to acquire further common shares as
follows:

| |                                 |  |                   |  |  |          |  |  |                  | 
| | ------------------------------- |  | ----------------- |  |  | -------- |  |  | ---------------- | 
| |                                 |  |                   |  |  | Exercise |  |  |                  | 
| |                                 |  | Number            |  |  | Price    |  |  |                  | 
| |                                 |  | of
      Warrants |  |  | (US$)    |  |  | Expiry Date      | 
| |                                 |  |                   |  |  |          |  |  |                  | 
| |                                 |  | 187,857           |  |  | 0.26     |  |  | January 16, 2012 | 
| |                                 |  | 66,666            |  |  | 0.30     |  |  | May 19, 2012     | 
| |                                 |  | 33,333            |  |  | 0.60     |  |  | July 2, 2011     | 
| | Balance as March
      31, 2011 |  | 287,856           |  |  | 0.31     |  |  |                  | 

Warrants transactions are summarized as
follows:

---

|PARK PLACE ENERGY CORP.                       
|----------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|(An Exploration Stage Company)                
|(Expressed in Canadian Dollars)               
|MARCH 31, 2011                                
|(Unaudited)                                   
|                                              

|5. | COMMON STOCK(contd)
|-- | ---------------------

| |                            |  |           |  |   |              |  |  |           |   |   |          | 
| | -------------------------- |  | --------- |  | - | ------------ |  |  | --------- | - | - | -------- | 
| |                            |  | March 31, |  |   | December 31, | 
| |                            |  | 2011      |  |   | 2010         | 
| |                            |  |           |  |   |              |  |  |           |   |   |          | 
| |                            |  |           |  |   | Weighted     |  |  |           |   |   | Weighted | 
| |                            |  |           |  |   | Average      |  |  |           |   |   | Average  | 
| |                            |  |           |  |   | Exercise     |  |  |           |   |   | Exercise | 
| |                            |  | Number of |  |   | Price        |  |  | Number of |   |   | Price    | 
| |                            |  | Warrants  |  |   | (US$)        |  |  | Warrants  |   |   | (US$)    | 
| |                            |  |           |  |   |              |  |  |           |   |   |          | 
| | Balance, beginning of year |  | 287,856   |  | $ | 0.31         |  |  | 537,167   |   | $ | 4.20     | 
| |                            |  |           |  |   |              |  |  |           |   |   |          | 
| | Granted                    |  | -         |  |   | -            |  |  | 254,523   |   |   | 0.27     | 
| |                            |  |           |  |   |              |  |  |           |   |   | 0.27     | 
| | Expired / cancelled        |  | -         |  |   | -            |  |  | (503,834  | ) |   | 4.50     | 
| |                            |  |           |  |   |              |  |  |           |   |   |          | 
| | Balance, end of the period |  | 287,856   |  | $ | 0.31         |  |  | 287,856   |   | $ | 0.31     | 

During the three month period ended
March 31, 2011 the Company issued no warrants.

The following weighted average
assumptions were used for the Black Scholes valuation of stock options granted
during the year ended December 31:

| |                           |  |         | 
| | ------------------------- |  | ------- | 
| |                           |  | 2010    | 
| |                           |  |         | 
| | Risk-free interest rate   |  | 1.83%   | 
| | Expected life of warrants |  | 2 years | 
| | Annualized volatility     |  | 279.66% | 
| | Dividend rate             |  | 0.00%   | 

|6. | SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH
      FLOWS
|-- | --------------------------------------------------------

| |                                              |   |              |  |   |              |  |   |              | 
| | -------------------------------------------- | - | ------------ |  | - | ------------ |  | - | ------------ | 
| |                                              |   | Cumulative   |  |   |              |  |   |              | 
| |                                              |   | Amounts from |  |   |              |  |   |              | 
| |                                              |   | Inception    |  |   |              |  |   |              | 
| |                                              |   | on May 2,    |  |   | Three Months |  |   | Year         | 
| |                                              |   | 2006 to      |  |   | Ended        |  |   | Ended        | 
| |                                              |   | March 31,    |  |   | March 31,    |  |   | December 31, | 
| |                                              |   | 2011         |  |   | 2011         |  |   | 2010         | 
| |                                              |   |              |  |   |              |  |   |              | 
| | Cash paid during the period for interest     | $ | -            |  | $ | -            |  | $ | -            | 
| |                                              |   |              |  |   |              |  |   |              | 
| | Cash paid during the period for income taxes | $ | -            |  | $ | -            |  | $ | -            | 

---

|PARK PLACE ENERGY CORP.                       
|----------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|(An Exploration Stage Company)                
|(Expressed in Canadian Dollars)               
|MARCH 31, 2011                                
|(Unaudited)                                   
|                                              

|6. | SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH FLOWS(contd)                                                                                                                                                                                 
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                             
|   | Significant non-cash transaction during the three month
      period ended March 31, 2010 include:                                                                                                                                          
|   |                                                                                                                                                                                                                                             
|   | a)                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                             
|   | b)                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                             
|   | There are no significant non-cash transaction during the
      three month period ended March 31, 2011.                                                                                                                                     
|   |                                                                                                                                                                                                                                             
|7. | RELATED PARTY TRANSACTIONS                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                             
|   | During the three month period ended March 31, 2011 the
      Company entered into the following transactions with related
    parties:                                                                                                      
|   |                                                                                                                                                                                                                                             
|   | The Company paid or accrued consulting fees of $3,571
      (March 31, 2010 - $18,250) to the directors 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.
|   |                                                                                                                                                                                                                                             
|8. | SEGMENTED INFORMATION                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                             
|   | The Company's operations are in the resource industry in
      Canada and the United States.                                                                                                                                                
|   |                                                                                                                                                                                                                                             
|   | Geographical information is as
follows:                                                                                                                                                                                                     

| |                        |   |           |  |   |              | 
| | ---------------------- | - | --------- |  | - | ------------ | 
| |                        |   | March 31, |  |   | December 31, | 
| |                        |   | 2011      |  |   | 2010         | 
| |                        |   |           |  |   |              | 
| | Oil and gas properties |   |           |  |   |              | 
| | Canada                 | $ | 76,691    |  | $ | 76,860       | 
| | United States          |   | -         |  |   | -            | 
| |                        |   |           |  |   |              | 
| |                        | $ | 76,691    |  | $ | 76,860       | 

All of the Companys oil and gas
revenues were from Canada.

---

|PARK PLACE ENERGY CORP.                       
|----------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|(An Exploration Stage Company)                
|(Expressed in Canadian Dollars)               
|MARCH 31, 2011                                
|(Unaudited)                                   
|                                              

|9. | FINANCIAL INSTRUMENTS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | Financial instruments, including receivables, prepaids,
      accounts payable and accrued liabilities are carried at cost, which
      management believes approximates fair value due to the short-term nature
      of these instruments. 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 companys
      investments are classified as held-for-trading and are marked-to-market at
      each reporting date with the unrealized gains or losses being recognized
      in net income.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | Under GAAP, fair value is defined as the exchange price
      that would be received for an asset or paid to transfer a liability (an
      exit price) in the principal or most advantageous market for the asset or
      liability in an orderly transaction between market participants on the
      measurement date. A fair value hierarchy is also established, which
      requires an entity to maximize the use of observable inputs and minimize
      the use of unobservable inputs when measuring fair value. There are three
      levels of inputs that may be used to measure fair
value:                                

| | Level 1  quoted prices in active markets for
      identical assets or liabilities                             
| | ----------------------------------------------------------------------------------------------------------------
| | Level 2  quoted prices for similar assets and
      liabilities in active markets or inputs that are observable
| | Level 3  inputs that are unobservable (for
      example cash flow modeling inputs based on assumptions)       

|    | At March 31, 2011 our cash and investments were measured
      using level one inputs.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|10. | SUBSEQUENT EVENTS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | On April 6, 2011, the Company entered into a Convertible
      Promissory Note (the Note), to evidence the Companys promise to repay
      the noteholder (the Holder) $150,000 (the Principal), together with
      interest (the Interest) from April 6, 2011 at a rate of 10% per annum on
      the unpaid balance of the Principal. Pursuant to the terms of the Note,
      the Principal and the Interest thereon shall be due and payable in full on
      April 6, 2012 (the Due Date). The Note may be prepaid at any time
      without penalty.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | Pursuant to the terms of the Note, the Principal and the
      Interest thereon is convertible, in whole and not in part, at the option
      of the lender at any time prior to the Due Date by notice to the Company
      into shares of the Companys common stock at the conversion price equal to
      $0.04 per common share. Pursuant to the terms of the Note on or about May
      4, 2011, the Company issued to the Holder 5,000,000 restricted shares of
      the Companys common stock (the Collateral Shares), as collateral under
      the Note. Such Collateral Shares are being held in escrow by the Holder.
      Upon conversion by the Holder of the Principal and Interest into the
      Companys common shares, or upon payment in full of the Note and all
      Interest thereon, the Collateral Shares shall be cancelled and returned to
      Treasury. The Company relied on Regulation S as an exemption from the
      registration requirements of the Securities Act for the issuance of the
      Collateral Shares to the Holder.

---

|Item 2. | Managements Discussion and Analysis of
      Financial Condition and Results of Operations
|------- | -------------------------------------------------------------------------------------------

The following discussion of our financial condition, changes in
financial condition and results of operations for the three months ended March
31, 2011 and 2010 should be read in conjunction with our unaudited interim
financial statements and related notes for the three months ended March 31, 2011
and 2010. The following discussion contains forward-looking statements that
involve risks, uncertainties and assumptions. Our actual results may differ
materially from those anticipated in these forward-looking statements as a
result of many factors, including, but not limited to, those set forth under the
heading Risk Factors in our Annual Report on Form 10-K.

Overview of our Business

We are currently an exploration stage company engaged in
exploring for conventional oil and natural gas. In the projects in which we hold
interests, another party typically acts as the operator of the project. With
respect to the projects that we participate in, we provide to the operator
funding for our proportionate share of costs as well as technical input on how
best to develop the property. As a way to keep our overhead down, we engage the
services of consultants who have technical expertise to best represent our
interests.

Plan of Operations

Overview

Our initial Plan of Operations for the next 12 months is to
work with the Bulgarian Ministry of Economy, Energy and Tourism, as well as
negotiate with Overgas Inc. directly, to attempt to find a positive conclusion
to the current court case in front of the Supreme Administrative Court of
Bulgaria. If the original permit is upheld or if the Company can enter into a
Joint Venture agreement with Overgas Inc., we plan to undertake an exploration
program in the Dobroudja Basin. The first year program includes perforating and
testing the Vranino #1 well, and procuring a seismic program of the license area
which will cost approximately $350,000. While the Company awaits the outcome in
Bulgaria representatives are actively seeking further domestic and international
exploration opportunities either through direct acquisition or joint venture
agreements. We anticipate spending approximately $150,000 in the next 12 months
in office and general expenses, as well as approximately $500,000 in
professional, consulting and management fees.

Estimated Capital Costs

Based on our current plan of operations as set forth above, we
estimate that we will require approximately $1.000,000 to pursue our plan of
operations over the next 12 months. As at March 31, 2011, we had cash of $1,877
and a working capital deficit of $167,250. 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 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.

Results of Operations

The following table sets forth our results of operations from
inception on May 2, 2006 to March 31, 2011 as well as for the three month
periods ended March 31, 2011 and 2010.

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|                                                           |   |                                                                            |   |   |                                      |   |   |                                     |  
|---------------------------------------------------------- | - | -------------------------------------------------------------------------- | - | - | ------------------------------------ | - | - | ----------------------------------- | -
|                                                           |   | Cumulative
      Amounts From Inception May 4,
      2006 toMarch 31, 2011 |   |   | Three Months
    EndedMarch 31, 2011 |   |   | Three Months
    EndedMarch 31,2010 |  
|REVENUE                                                    |   |                                                                            |   |   |                                      |   |   |                                     |  
|Oil and gas                                                | $ | 1,619,047                                                                  |   | $ | -                                    |   | $ | -                                   |  
|                                                           |   |                                                                            |   |   |                                      |   |   |                                     |  
|DIRECT COSTS                                               |   |                                                                            |   |   |                                      |   |   |                                     |  
|Depletion                                                  |   | 1,235,574                                                                  |   |   | -                                    |   |   | -                                   |  
|Operating expenses                                         |   | 1,140,050                                                                  |   |   | -                                    |   |   | -                                   |  
|                                                           |   |                                                                            |   |   |                                      |   |   |                                     |  
|                                                           |   | (756,577                                                                   | ) |   | -                                    |   |   | -                                   |  
|EXPENSES                                                   |   |                                                                            |   |   |                                      |   |   |                                     |  
|Office and general                                         |   | 731,125                                                                    |   |   | 8,534                                |   |   | 24,461                              |  
|Depreciation                                               |   | 4,518                                                                      |   |   | 469                                  |   |   | 299                                 |  
|Exploration expenses                                       |   | 308,534                                                                    |   |   | -                                    |   |   | -                                   |  
|Foreign exchange loss                                      |   | 122,046                                                                    |   |   | 860                                  |   |   | 2,236                               |  
|Professional fees                                          |   | 919,702                                                                    |   |   | (544                                 | ) |   | 20,047                              |  
|Consulting                                                 |   | 1,872,262                                                                  |   |   | 6,571                                |   |   | 83,876                              |  
|Investor relations                                         |   | 884,140                                                                    |   |   | 102                                  |   |   | 4,285                               |  
|Management fees                                            |   | 631,638                                                                    |   |   | -                                    |   |   | -                                   |  
|                                                           |   |                                                                            |   |   |                                      |   |   |                                     |  
|Travel                                                     |   | 192,719                                                                    |   |   | -                                    |   |   | -                                   |  
|                                                           |   |                                                                            |   |   |                                      |   |   |                                     |  
|Stock-based
      compensation (Note 5)                    |   | 2,004,083                                                                  |   |   | -                                    |   |   | 163,000                             |  
|                                                           |   |                                                                            |   |   |                                      |   |   |                                     |  
|                                                           |   | (7,670,767                                                                 | ) |   | (15,992                              | ) |   | (298,204                            | )
|                                                           |   |                                                                            |   |   |                                      |   |   |                                     |  
|Loss before other items and income
      taxes             |   | (8,427,344                                                                 | ) |   | (15,992                              | ) |   | (298,204                            | )
|                                                           |   |                                                                            |   |   |                                      |   |   |                                     |  
|OTHER ITEMS                                                |   |                                                                            |   |   |                                      |   |   |                                     |  
|Interest and other revenue                                 |   | 122,683                                                                    |   |   | 12,978                               |   |   | 23,691                              |  
|Gain on sale of
      oil and gas properties               |   | 381,166                                                                    |   |   | -                                    |   |   | -                                   |  
|Gain on sale of the marketable
      securities            |   | 4,635                                                                      |   |   | -                                    |   |   | -                                   |  
|Loss on sale of
      disposal of properties               |   | (53,869                                                                    | ) |   | -                                    |   |   | -                                   |  
|Loss on write-down of promissory note                      |   | (254,997                                                                   | ) |   | -                                    |   |   | -                                   |  
|Gain on
      settlement of debt                           |   | 341,777                                                                    |   |   | -                                    |   |   | -                                   |  
|Write off oil and gas costs and
      exploration advances |   | (4,244,676                                                                 | ) |   | -                                    |   |   | -                                   |  
|                                                           |   |                                                                            |   |   |                                      |   |   |                                     |  
|Loss before income tax                                     |   | (12,130,625                                                                | ) |   | (3,014                               | ) |   | (274,513                            | )
|                                                           |   |                                                                            |   |   |                                      |   |   |                                     |  
|Future income tax recovery                                 |   | 291,060                                                                    |   |   | -                                    |   |   | -                                   |  
|                                                           |   |                                                                            |   |   |                                      |   |   |                                     |  
|Net loss for the period                                    |   | (11,839,565                                                                | ) |   | (3,014                               | ) |   | (274,513                            | )
|                                                           |   |                                                                            |   |   |                                      |   |   |                                     |  
|OTHER COMPREHENSIVE INCOME                                 |   |                                                                            |   |   |                                      |   |   |                                     |  
|Foreign currency translation
      adjustment              |   | 237,861                                                                    |   |   | 55                                   |   |   | (3,093                              | )

Revenue

Our oil and gas revenue for the three months ended March 31,
2011 was $nil, compared to $nil for the three months ended March 31, 2010. This
revenue is offset by direct costs of $nil in depletion and $nil in operating
expenses for the three months ended March 31, 2011, compared to $nil in
depletion and $nil in operating expenses for the three months ended March 31,
2010.

Expenses

Our primary expense categories are described below:

Office and General Expenses

Our office and general expenses decreased to $8,534 for the
three months ended March 31, 2011 from $24,461 for the three months ended March
31, 2010.

Professional Fees

Our professional fees decreased to ($544) for the three months
ended March 31, 2011 from $20,047 for the three months ended March 31, 2010.

---

Consulting Expenses

Our consulting expenses decreased to $6,571 for the three
months ended March 31, 2011 from $83,876 for the three months ended March 31,
2010.

Investor Relations Expenses

Our investor relations expense for the three months ended March
31, 2011decreased to $102 compared to $4,285 for the three months ended March
31, 2010.

Management Fees

Our management fees were $nil for the three months ended March
31, 2011 compared to $nil for the three months ended March 31, 2010.

Stock-Based Compensation Expenses

Our stock-based compensation expenses decreased to $nil for the
three months ended March 31, 2011 from $163,000 for the three months ended March
31, 2010.

Loss

Our net loss before other items and taxes for the three months
ended March 31, 2011 was $3,014, compared to $274,513 for the three months ended
March 31, 2010. Our comprehensive loss for the three months ended March 31, 2011
was $2,959, compared to $277,606 for the three months ended March 31, 2010.

Liquidity and Capital Resources

|                                  |   | As at          |   |   | As at             |  
|--------------------------------- | - | -------------- | - | - | ----------------- | -
|                                  |   | March 31, 2011 |   |   | December 31, 2010 |  
|                                  |   | (Unaudited)    |   |   | (Audited)         |  
|Cash                              | $ | 1,877          |   | $ | 22                |  
|Working capital (deficit)         |   | (167,250       | ) |   | (161,929          | )
|Total assets                      |   | 93,285         |   |   | 92,595            |  
|Total liabilities                 |   | 173,484        |   |   | 169,835           |  
|Shareholders equity (deficiency) |   | (80,199        | ) |   | (77,240           | )

We anticipate that we will require approximately $1,000,000 to
pursue our plan of operations over the next 12 months. As at March 31, 2011, we
had cash of $1,877 and a working capital deficit of $167,250. 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 plan of operations.

On April 6, 2011, we entered into a Convertible Promissory Note
(the Note), to evidence our promise to repay the noteholder (the Holder)
$150,000 (the Principal), together with interest (the Interest) from April
6, 2011 at a rate of 10% per annum on the unpaid balance of the Principal.
Pursuant to the terms of the Note, the Principal and the Interest thereon shall
be due and payable in full on April 6, 2012 (the Due Date). The Note may be
prepaid at any time without penalty.

Pursuant to the terms of the Note, the Principal and the
Interest thereon is convertible, in whole and not in part, at the option of the
lender at any time prior to the Due Date by notice to us into shares of our
common stock at the conversion price equal to $0.04 per common share. Pursuant
to the terms of the Note on or about May 4, 2011, we issued to the Holder
5,000,000 restricted shares of our common stock (the Collateral Shares), as
collateral under the Note. Such Collateral Shares are being held in escrow by
the Holder. Upon conversion by the Holder of the Principal and Interest into
common shares, or upon payment in full of the Note and all Interest thereon, the
Collateral Shares shall be cancelled and returned to Treasury.

---

Cash Used in Operating Activities

Net cash used in operating activities in the three months ended
March 31, 2011 was $78,655, compared to $31,080 in the three months ended March
31, 2010.

Cash Flow from Investing Activities

Net cash from investing activities in the three months ended
March 31, 2011 was $nil, compared to $36,172 used in investing activities in the
three months ended March 31, 2010.

Cash Provided By Financing Activities

In the three months ended March 31, 2011, we received cash of
$81,500, compared to $92,414 in three months ended March 31, 2010.

Subsequent to the end of the period, on April 6, 2011, we
entered into the Note referred to above, to evidence our promise to repay the
Holder $150,000 together with interest from April 6, 2011 at a rate of 10% per
annum on the unpaid balance of the principal.

Off-Balance Sheet Arrangements

There are 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, which individually or in
the aggregate is material to our investors.

|Item 3. | Quantitative and Qualitative Disclosures
      About Market Risk
|------- | ----------------------------------------------------------------

Not applicable because we are a smaller reporting company.

|Item 4. | Controls and Procedures
|------- | -----------------------

Disclosure Controls and Procedures

David Johnson, our principal executive and our principal
financial officer, is responsible for establishing and maintaining disclosure
controls and procedures for our company.

Management has evaluated the effectiveness of our disclosure
controls and procedures as of three months ended March 31, 2011 (under the
supervision and with the participation of our principal executive officer and
principal financial officer), pursuant to Rule 13a-15(b) promulgated under the
Securities Exchange Act of 1934, as amended. Based on this evaluation,
our principal executive officer and principal financial officer concluded that
our companys disclosure controls and procedures were effective as three months
ended March 31, 2011.

No Changes in Internal Control over Financial
Reporting

There were no changes in our internal control over financial
reporting that occurred during our last fiscal quarter that have materially
affected, or are reasonably likely to materially affect, our internal control
over financial reporting.

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 because we are a smaller reporting company.

---

|Item 2. | Unregistered Sales of Equity Securities and
      Use of Proceeds
|------- | -----------------------------------------------------------------

On April 6, 2011, we entered into a Convertible Promissory Note
(the Note), to evidence our promise to repay the noteholder (the Holder)
$150,000 (the Principal), together with interest (the Interest) from April
6, 2011 at a rate of 10% per annum on the unpaid balance of the Principal.
Pursuant to the terms of the Note, the Principal and the Interest thereon shall
be due and payable in full on April 6, 2012 (the Due Date). The Note may be
prepaid at any time without penalty.

Pursuant to the terms of the Note, the Principal and the
Interest thereon is convertible, in whole and not in part, at the option of the
lender at any time prior to the Due Date by notice to us into shares of the
Companys common stock at the conversion price equal to $0.04 per common share.
Pursuant to the terms of the Note on or about May 4, 2011, we issued to the
Holder 5,000,000 restricted shares of our common stock (the Collateral
Shares), as collateral under the Note. Such Collateral Shares are being held in
escrow by the Holder. Upon conversion by the Holder of the Principal and
Interest into the Companys common shares, or upon payment in full of the Note
and all Interest thereon, the Collateral Shares shall be cancelled and returned
to Treasury. We relied on Regulation S as an exemption from the registration
requirements of the Securities Act for the issuance of the Note and the
Collateral Shares to the Holder.

|Item 3. | Defaults Upon Senior Securities
|------- | -------------------------------

None.

|Item 4. | (Removed and Reserved)
|------- | ----------------------

Not applicable.

|Item 5. | Other Information
|------- | -----------------

None

|Item 6. | Exhibits
|------- | --------

|Articles of Incorporation
      and By-laws
|-------------------------------------------
|3.1                                        
|3.2                                        
|3.3                                        
|3.4                                        
|Material Contracts                         
|10.1                                       
|10.2                                       
|10.3                                       
|10.4                                       
|10.5                                       
|10.6                                       
|10.7                                       
|10.8                                       
|10.9                                       
|10.10                                      
|10.11                                      
|10.12                                      
|10.13                                      
|10.14                                      
|10.15                                      
|10.16                                      
|10.17                                      
|10.18                                      
|10.19                                      

---

|10.20                                           | Purchase and Sale Agreement dated February 15, 2008 among
      the Company, Panther Minerals Inc. and Brasam Extracao Ltda.(3)                                                           
|----------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.21                                           | Amended Management Services Agreement dated April 10,
      2008 between the Company and David Stadnyk (5)                                                                                
|10.22                                           | Termination Agreement regarding the Worsley Area
      Properties between the Company and Bounty Developments Ltd. dated June 25,
      2008(6)                                           
|10.23                                           | Termination Agreement regarding the Atlee Buffalo Area
      Properties between the Company and Bounty Developments Ltd. dated June 25,
      2008(6)                                     
|10.24                                           | Offer to Purchase Agreement regarding the Kerrobert Area
      Properties between the Company and True Energy Inc. dated June 25,
      2008(6)                                           
|10.25                                           | Purchase and Sale Agreement between the Company and
  Brasam Extracao Minerals Ltda. dated June 26, 2008(6)                                                                               
|10.26                                           | Petroleum and Natural Gas Lease dated July 24,
      2008(6)                                                                                                                              
|10.27                                           | Termination Agreement regarding the Cecil (Eureka) Area
      Properties between the Company and Bounty Developments Ltd. dated March
      30, 2009(6)                                   
|10.28                                           | Seismic Earning Agreement dated August 19,
      2009(7)                                                                                                                                  
|10.29                                           | Purchase and Sale Agreement dated September 16,
      2009(9)                                                                                                                             
|10.30                                           | Notice of Assignment(9)                                                                                                                                                                   
|10.31                                           | Assignment Agreement dated May 11, 2010 with Canadian
      Rigger Energy Inc. (11)                                                                                                       
|10.32                                           | Convertible Promissory Note dated April 6, 2011 with
      Pikka Asset Management Ltd (12)                                                                                                
|14.1                                            | Code of Ethics (4)                                                                                                                                                                        
|Subsidiaries
      of the Small Business Issuer |                                                                                                                                                                                           
|21.1                                            | Subsidiaries of Small Business Issuer:                                                                                                                                                    
|                                                | Name of Subsidiary                                                                                                                                                                        
|                                                | Park Place Energy (Canada) Inc.                                                                                                                                                           
|                                                | Park Place Energy (International) Inc.                                                                                                                                                    
|Certifications                                  |                                                                                                                                                                                           
|31.1                                            | Certification of Chief Executive and Chief Financial
      Officer pursuant to Rule 13a-14 and Rule 15d-14(a), promulgated under the
  Securities and Exchange Act of 1934, as amended(12)
|32.1                                            | Certification of Chief Executive Officer and Chief
      Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant
  to Section 906 of the Sarbanes-Oxley Act of 2002(12) 

|Notes |                                                                                                                      
|----- | ---------------------------------------------------------------------------------------------------------------------
|(1)   | Incorporated by reference from our Current
      Report on Form 8-K/A, filed with the SEC on August 8, 2007.         
|(2)   | Incorporated by reference from our registration
      statement on Form SB-2, filed with the SEC on December 9, 2004.
|(3)   | Filed with our Current Report on Form 8-K,
      filed with the SEC on March 6, 2008.                                
|(4)   | Incorporated by reference from our Annual
      Report of Form 10-KSB, filed with the SEC on October 11, 2006.       
|(5)   | Incorporated by reference from our Annual
      Report on Form 10-KSB, filed with the SEC on April 15, 2008.         
|(6)   | Incorporated by reference from our Annual
      Report on Form 10-K, filed with the SEC on March 31, 2009.           
|(7)   | Incorporated by reference from our Current
      Report on Form 8-K, filed with the SEC on September 3, 2009.        
|(8)   | Incorporated by reference form our Current
      Report on Form 8-K, filed with the SEC on March 29, 2010.           
|(9)   | Incorporated by reference form our Current
      Report on Form 8-K, filed with the SEC on November 11, 2009.        
|(10)  | Incorporated by reference from our Annual
      Report on Form 10-K, filed with the SEC on April 15, 2010.           
|(11)  | Incorporated by reference from our Current
      Report on Form 8-K, filed with the SEC on May 25, 2010.             
|(12)  | Filed herewith.                                                                                                      

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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 ENERGYCORP.

|By: | David Johnson                                                    
|--- | -------------------------------------------------------------------
|    | David Johnson                                                      
|    | President, Chief Executive Officer, Secretary,                     
|    | Treasurer and a Director                                           
|    | (Principal Executive Officer and Principal
      Financial Officer)
|    | Date: May 13, 2011                                                 

---