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UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

**FORM 10-QSB**

(Mark One)

[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2007

OR

[   ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF
THE EXCHANGE ACT

For the transition period from _____________to _____________

Commission file number 000-52300

SUN CAL ENERGY, INC.(Exact name of small business issuer as specified in its
charter)

|Nevada                                                               | 81-0659377                          
|-------------------------------------------------------------------- | ------------------------------------
|(State or other jurisdiction of incorporation or
      organization) | (I.R.S. Employer Identification No.)

Suite 700, 205 - 5thAvenue, S.W., Calgary, Alberta T2P 2V7 Canada(Address of principal
executive offices)

403-538-4772(Issuers telephone number)

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

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS

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

APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuers
classes of common equity, as of the latest practicable date: 82,463,333
shares of common stock issued and outstanding as of November 12, 2007.

Transitional Small Business Disclosure Format (Check one): Yes
[   ]   No [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]

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- 2 -

PART I  FINANCIAL INFORMATION

Item 1. Financial Statements

These financial statements have been prepared by Sun Cal
Energy, Inc. (the Company) without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission (SEC). Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
omitted in accordance with such SEC rules and regulations. In the opinion of
management, the accompanying statements contain all adjustments necessary to
present fairly the financial position of the Company as of September 30, 2007,
and its results of operations, stockholders equity, and its cash flows for the
three month period ended September 30, 2007 and for the period from inception
(July 20, 2004) to September 30, 2007. The results for these interim periods are
not necessarily indicative of the results for the entire year. The accompanying
financial statements should be read in conjunction with the financial statements
and the notes thereto filed as a part of the Companys annual report filed on
Form 10-KSB.

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- 3 -

Sun Cal Energy, Inc.(A Development Stage
Company)Consolidated Balance Sheet

|                                                           |   | September 30, 2007 |  
|---------------------------------------------------------- | - | ------------------ | -
|                                                           |   |                    |  
|ASSETS                                                     |   |                    |  
|                                                           |   |                    |  
|Current Assets                                             |   |                    |  
|Cash & cash equivalents                                    | $ | 38,987             |  
|Cash - in trust                                            |   | 949,779            |  
|Prepaid expenses                                           |   | 2,800              |  
|                                                           |   | 991,566            |  
|Property and equipment                                     |   |                    |  
|Petroleum and natural
      gas properties                 |   | 6,723,916          |  
|                                                           |   |                    |  
|Intangible assets                                          |   | 10,800             |  
|                                                           |   |                    |  
|Total Assets                                               | $ | 7,726,282          |  
|                                                           |   |                    |  
|Current Liabilities                                        |   |                    |  
|Accounts payable and accrued expenses                      | $ | 223,657            |  
|                                                           |   |                    |  
|Stockholders' Equity                                       |   |                    |  
|Common stock:                                              |   |                    |  
|Authorized:
      750,000,000 with $0.0001 par value       |   |                    |  
|Issued and fully paid: 82,163,333 as of September 30, 2007 |   | 82,163             |  
|Additional paid-in capital                                 |   | 8,604,837          |  
|Deficit-
      Accumulated during the development stage    |   | (1,184,375         | )
|                                                           |   | 7,502,625          |  
|                                                           |   |                    |  
|Total Liabilities and Stockholders' Equity                 | $ | 7,726,282          |  

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- 4 -

Sun Cal Energy, Inc.(A Development Stage
Company)Consolidated Statement of Operations

|                                          |   | Three Months Ended |   |   | July 20, 2004 |  
|----------------------------------------- | - | ------------------ | - | - | ------------- | -
|                                          |   | September 30,      |   |   | (Inception)   |  
|                                          |   |                    |   |   |               |  
|                                          |   | 2006               |   |   | 2007          |  
|                                          |   |                    |   |   |               |  
|Net Revenue                               | $ | -                  |   | $ | -             |  
|                                          |   |                    |   |   |               |  
|Operating Expenses                        |   |                    |   |   |               |  
|Abandoned exploration costs               |   | -                  |   |   | -             |  
|General and administrative
      expenses |   | 12,771             |   |   | 480,342       |  
|                                          |   | 12,771             |   |   | 480,342       |  
|                                          |   |                    |   |   |               |  
|Net
      loss from operations            |   | (12,771            | ) |   | (480,342      | )
|                                          |   |                    |   |   |               |  
|Other Expenses                            |   |                    |   |   |               |  
|Loss on disposition of
      asset        |   | -                  |   |   | -             |  
|                                          |   |                    |   |   |               |  
|Net loss                                  | $ | (12,771            | ) | $ | (480,342      | )
|                                          |   |                    |   |   |               |  
|Net loss per share  basic and diluted    |   | (0.00              | ) |   | (0.01         | )
|                                          |   |                    |   |   |               |  
|                                          |   |                    |   |   |               |  
|Weighted average common shares            |   |                    |   |   |               |  
|outstanding  basic
      and diluted     |   | 5,125,000          |   |   | 80,999,203    |  

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Sun Cal Energy, Inc. (A Development Stage
Company) Consolidated Statement of Cash Flow

|                                                   |   |              |   |   |             |   |   | July 20, 2004      |  
|-------------------------------------------------- | - | ------------ | - | - | ----------- | - | - | ------------------ | -
|                                                   |   | September 30 |   |   | (Inception) |  
|                                                   |   |              |   |   |             |   |   | through            |  
|                                                   |   | 2006         |   |   | 2007        |   |   | September 30, 2007 |  
|Cash Flows From Operating Activities:              |   |              |   |   |             |   |   |                    |  
|Net loss from continuing operations                | $ | (12,771      | ) | $ | (480,342    | ) | $ | (1,184,375         | )
|Adjustment to reconcile net loss to net
      cash |   |              |   |   |             |   |   |                    |  
|used in operating activities                       |   |              |   |   |             |   |   |                    |  
|Loss on disposition
      of asst                  |   | -            |   |   | -           |   |   | 581                |  
|Non cash consulting services                       |   | -            |   |   | -           |   |   | 25,000             |  
|Contributed rent
      and services                |   | 2,250        |   |   | -           |   |   | 18,750             |  
|Depreciation                                       |   | 79           |   |   | -           |   |   | 369                |  
|Amortization                                       |   | -            |   |   | 1,112       |   |   | 2,549              |  
|Changes in assets                                  |   |              |   |   |             |   |   |                    |  
|(Increase) decrease in prepaid expenses            |   | -            |   |   | 1,750       |   |   | (2,800             | )
|Changes in liabilities                             |   |              |   |   |             |   |   |                    |  
|Increase (decrease) in amounts payable             |   | -            |   |   | 172,296     |   |   | 204,212            |  
|Net cash used in operating activities              |   | (10,442      | ) |   | (305,184    | ) |   | (935,714           | )
|Cash Flows From Investing Activities:              |   |              |   |   |             |   |   |                    |  
|Acquisition of oil and gas properties              |   | -            |   |   | (1,146,797  | ) |   | (2,504,471         | )
|Acquisition of computer equipment                  |   | -            |   |   | -           |   |   | (950               | )
|Website design costs                               |   | -            |   |   | -           |   |   | (13,349            | )
|Net cash used investing
      activities           |   | -            |   |   | (1,146,797  | ) |   | (2,518,770         | )
|Cash Flows From Financing Activities:              |   |              |   |   |             |   |   |                    |  
|Proceeds from issuance of common stock             |   | -            |   |   | 1,850,000   |   |   | 4,443,250          |  
|Loans received from related party                  |   | -            |   |   | -           |   |   | 32,200             |  
|Loans repaid to related party                      |   | -            |   |   | -           |   |   | (32,200            | )
|Net cash provided by financing activities          |   | -            |   |   | 1,850,000   |   |   | 4,443,250          |  
|Net cash provided (used) in continuing operations  |   | (10,442      | ) |   | 398,019     |   |   | 988,766            |  
|Cash and cash equivalents, beginning of year       |   | 12,039       |   |   | 590,747     |   |   | -                  |  
|Cash and cash equivalents, end of year             | $ | 1,597        |   | $ | 988,766     |   | $ | 988,766            |  
|Supplemental disclosures of cash flow information: |   |              |   |   |             |   |   |                    |  
|Interest paid                                      | $ | -            |   | $ | -           |   |   |                    |  
|Income tax paid                                    | $ | -            |   | $ | -           |   |   |                    |  

Supplemental disclosures of non-cash investing and financing
activities:

During the three months ended September 30, 2007, the Company
incurred capitalized exploration costs of $19,445 which are included in accounts
payable.

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Sun Cal Energy, Inc. (A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1  ORGANIZATION AND BASIS OF PRESENTATION

Organization

Sun Cal Energy, Inc. (the Company), was incorporated in the
State of Nevada on July 20, 2004 under the name Host Ventures, Inc. On November
6, 2006, the Company changed its name to Sun Cal Energy, Inc. The Company is in
the exploration stage, as defined in Statement of Financial Accounting Standards
(SFAS) No. 7,  Accounting and Reporting by Development Stage Enterprises ,
with its principal activity being the exploration and development of oil and gas
properties.

Effective March 12, 2007, the Company acquired all of the
outstanding shares of Sun Cal Energy Corporation (SCEC) in exchange for
issuing 26,925,000 of its common stock. SCEC was incorporated in the state of
Nevada on June 2, 2006. As of the date of the acquisition, both companies were
under common control, and therefore for financial reporting purposes, the
acquisition is treated as if it occurred on July 1, 2006. Assets acquired from
SCEC were recorded at their historical cost bases on July 1, 2006 and the
financial statements included herein combine the activities of both companies
since July 1, 2006.

Basis of Presentation

These financial statements have been prepared by Sun Cal
Energy, Inc. (the Company) without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission (SEC). Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
omitted in accordance with such SEC rules and regulations. In the opinion of
management, the accompanying statements contain all adjustments necessary to
present fairly the financial position of the Company as of September 30, 2007,
and its results of operations, stockholders equity, and its cash flows for the
three month period ended September 30, 2007 and for the period from inception
(July 20, 2004) to September 30, 2007. The results for these interim periods are
not necessarily indicative of the results for the entire year. The accompanying
financial statements should be read in conjunction with the financial statements
and the notes thereto filed as a part of the Companys annual report filed on
Form 10-KSB.

The accompanying financial statements include the accounts and
transactions of the Company and its wholly owned subsidiary, Sun Cal Energy
Corporation, and have been prepared in conformity with accounting principles
generally accepted in the United States of America, which contemplate
continuation of the Company as a going concern. The Company has no established
source of material revenue, has incurred a net loss for the three months ended
September 30, 2007 of $480,342 and has and has an accumulated deficit since its
inception of $1,184,374. These conditions raise substantial doubt as to the
Company's ability to continue as a going concern. These financial statements do
not include any adjustments that might result from the outcome of this
uncertainty. These financial statements do not include any adjustments relating
to the recoverability and classification of recorded asset amounts, or amounts
and classification of liabilities that might be necessary should the Company be
unable to continue as a going concern.

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- 7 -

Management recognizes that the Company must generate additional
resources to enable it to continue operations. Management intends to raise
additional funds through debt and/or equity financing or through other means
that it deems necessary. However, no assurance can be given that the Company
will be successful in raising additional capital. Further, even if the company
raises additional capital, there can be no assurance that the Company will
achieve profitability or positive cash flow. If management is unable to raise
additional capital and expected significant revenues do not result in positive
cash flow, the Company will not be able to meet its obligations and may have to
cease operations.

Stock Split

Effective November 6, 2006, the Company authorized a 10-for-1
stock split. All references in the accompanying financial statements to the
number of shares outstanding and per-share amounts have been restated to reflect
the indicated stock split.

NOTE 2  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The accompanying financial statements include the accounts and
transactions of Sun Cal Energy, Inc. and its subsidiary. Intercompany
transactions and balances have been eliminated in consolidation.

Stock Based Compensation

The Company accounts for stock-based compensation under SFAS
No. 123R, "Share- based Payment " and SFAS No. 148, "Accounting for Stock-Based
Compensation--Transition and Disclosure--An amendment to SFAS No. 123." These
standards define a fair value based method of accounting for stock-based
compensation. In accordance with SFAS Nos. 123R and 148, the cost of stock-based
employee compensation is measured at the grant date based on the value of the
award and is recognized over the vesting period. The value of the stock-based
award is determined using the Black-Scholes option-pricing model, whereby
compensation cost is the excess of the fair value of the award as determined by
the pricing model at the grant date or other measurement date over the amount an
employee must pay to acquire the stock. The resulting amount is charged to
expense on the straight-line basis over the period in which the Company expects
to receive the benefit, which is generally the vesting period. During the three
months ended September 30, 2007, the Company recognized no compensation expense
under SFAS No. 123R as no options were issued to employees during the year.

Issuance of Stock for Non-Cash Consideration

All issuances of the Company's stock for non-cash consideration
have been assigned a per share amount equaling either the market value of the
shares issued or the value of consideration received, whichever is more readily
determinable. The majority of the non-cash consideration received pertains to
services rendered by consultants and others and has been valued at the market
value of the shares on the dates issued.

The Company's accounting policy for equity instruments issued
to consultants and vendors in exchange for goods and services follows the
provisions of EITF 96-18, Accounting for Equity Instruments That are Issued
to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or
Services and EITF 00-18, Accounting Recognition for Certain
Transactions Involving Equity Instruments Granted to Other Than Employees.
The measurement date for the fair value of the equity instruments issued is
determined at the earlier of (i) the date at which a commitment for performance
by the consultant or vendor is reached or (ii) the date at which the consultant
or vendor's performance is complete. In the

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- 8 -

case of equity instruments issued to consultants, the fair
value of the equity instrument is recognized over the term of the consulting
agreement. In accordance with EITF 00-18, an asset acquired in exchange for the
issuance of fully vested, nonforfeitable equity instruments should not be
presented or classified as an offset to equity on the grantor's balance sheet
once the equity instrument is granted for accounting purposes. Accordingly, the
Company records the fair value of the fully vested non-forfeitable common stock
issued for future consulting services as prepaid services in its consolidated
balance sheet.

Use of Estimates

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

Fair Value of Financial Instruments

The Companys financial instruments consist of cash and cash
equivalents, accounts payable, accrued expenses and notes payable, Pursuant to
SFAS No. 107, Disclosures About Fair Value of Financial Instruments,
the Company is required to estimate the fair value of all financial instruments
at the balance sheet date. The Company considers the carrying values of its
financial instruments in the financial statements to approximate their fair
values.

Cash and Cash Equivalents

For purposes of the statements of cash flows, the Company
defines cash equivalents as all highly liquid debt instruments purchased with a
maturity of three months or less, plus all certificates of deposit.

Property and Equipment

Property and equipment are stated at cost less accumulated
depreciation and amortization. Depreciation and amortization are calculated
using the straight-line method over the estimated useful lives of the related
assets. When property and equipment are retired or otherwise disposed of, the
related cost and accumulated depreciation are removed from the respective
accounts, and any gain or loss is included in operations. Expenditures for
maintenance and repairs are charged to operations as incurred; additions,
renewals and betterments are capitalized.

Long- Lived Assets

The Company accounts for its long-lived assets in accordance
with SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived
Assets." SFAS No. 144 requires that long-lived assets be reviewed for impairment
whenever events or changes in circumstances indicate that the historical cost
carrying value of an asset may no longer be appropriate. The Company assesses
recoverability of the carrying value of an asset by estimating the future net
cash flows expected to result from the asset, including eventual disposition. If
the future net cash flows are less than the carrying value of the asset, an
impairment loss is recorded equal to the difference between the asset's carrying
value and fair value or disposable value. As of September 30, 2007, the Company
did not deem any of its long-term assets to be impaired.

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Concentration of Credit Risk

Financial instruments, which potentially subject the Company to
concentrations of credit risk, consist of cash. Currently, the Company maintains
its cash in bank accounts which are not insured.

Revenue Recognition

The Company has not generated any revenue from its oil and gas
operations.

Oil and Gas Properties

The Company follows the full cost method of accounting for
crude oil and natural gas properties. Under this method, all direct costs and
certain indirect costs associated with acquisition of properties and successful
as well as unsuccessful exploration and development activities are capitalized.
Depreciation, depletion, and amortization of capitalized crude oil and natural
gas properties and estimated future development costs, excluding unproved
properties, are based on the unit-of-production method based on proved reserves.
The Company has not yet commenced the development of its properties as of
September 30, 2007.

Website development costs

Under FASB Emerging Issues Task Force Statement 00-2,
Accounting for Web Site Development Costs ("EITF 00-2"), costs and expenses
incurred during the planning and operating stages of the Company's web site
development are expensed as incurred. Under EITF 00-2, costs incurred in the web
site application and infrastructure development stages are capitalized by the
Company and amortized to expense over the web site's estimated useful life or
period of benefit. As of September 30, 2007, the Company had net capitalized
costs of $10,800 related to its web site development, which are being
depreciated on a straight-line basis over an estimated useful life of 3
years.

Website cost and accumulated depreciation as of September 30,
2007 is as follows:

Capitalized website costs
    $
    13,349Less accumulated amortization
    
    (2,549
    )$
    10,800


Income Taxes

The Company accounts for income taxes under the provisions of
SFAS No. 109, Accounting for Income Taxes. Under SFAS No. 109, deferred tax
assets and liabilities are recognized for future tax benefits or consequences
attributable to temporary differences between the financial statement carrying
amounts of existing assets and liabilities and their respective tax bases.
Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. A valuation allowance is
provided for significant deferred tax assets when it is more likely than not
that the asset will not be realized through future operations.

The Company has total net operating tax loss carry forwards at
September 30, 2007 of approximately $1,409,000 for federal income tax purposes.
These net operating losses have generated a deferred tax asset of approximately
$465,000 on which a valuation allowance equalling the total tax benefit has been

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- 10 -

provided due to the uncertain nature of it being realized. Net
operating loss carryforwards expire in various years through September 30, 2027
for federal tax purposes.

Loss Per Share

The Company reports earnings (loss) per share in accordance
with SFAS No. 128, "Earnings per Share." Basic earnings (loss) per share is
computed by dividing income (loss) available to common shareholders by the
weighted average number of common shares available. Diluted earnings (loss) per
share is computed similar to basic earnings (loss) per share except that the
denominator is increased to include the number of additional common shares that
would have been outstanding if the potential common shares had been issued and
if the additional common shares were dilutive. Diluted earnings (loss) per share
as not been presented since the effect of the assumed conversion of warrants to
purchase common shares would have an anti-dilutive effect. The only potential
common shares as of September 30, 2007 were 3,688,333 warrants that have been
excluded from the computation of diluted net loss per share because the effect
would have been anti-dilutive. If such shares were included in diluted EPS, they
would have resulted in weighted-average common shares of 83,523,406 for the
three months ended September 30, 2007. There were no potential common shares
outstanding at September 30, 2006.

Recent Accounting Pronouncement

SFAS No. 159 - In February 2007, the FASB issued
Statement No. 159, The Fair Value Option for Financial Assets and Financial
LiabilitiesIncluding an amendment of FASB Statement No. 115.This
Statement permits entities to choose to measure many financial instruments and
certain other items at fair value. The objective is to improve financial
reporting by providing entities with the opportunity to mitigate volatility in
reported earnings caused by measuring related assets and liabilities differently
without having to apply complex hedge accounting provisions. This Statement is
expected to expand the use of fair value measurement, which is consistent with
the Boards long-term measurement objectives for accounting for financial
instruments. This Statement applies to all entities, including not-for-profit
organizations. Most of the provisions of this Statement apply only to entities
that elect the fair value option. However, the amendment to FASB Statement No.
115, Accounting for Certain Investments in Debt and Equity Securities,
applies to all entities with available-for-sale and trading securities. Some
requirements apply differently to entities that do not report net income. This
Statement is effective as of the beginning of an entitys first fiscal year that
begins after November 15, 2007. Early adoption is permitted as of the beginning
of a fiscal year that begins on or before November 15, 2007, provided the entity
also elects to apply the provisions of FASB Statement No. 157, Fair Value
Measurements.No entity is permitted to apply this Statement retrospectively
to fiscal years preceding the effective date unless the entity chooses early
adoption. The choice to adopt early should be made after issuance of this
Statement but within 120 days of the beginning of the fiscal year of adoption,
provided the entity has not yet issued financial statements, including required
notes to those financial statements, for any interim period of the fiscal year
of adoption. This Statement permits application to eligible items existing at
the effective date (or early adoption date). The Company has evaluated the
impact of the implementation of SFAS No. 159 and does not believe the impact
will be significant to the Company's overall results of operations or financial
position.

NOTE 3. - CASH HELD IN TRUST

As discussed further in Note 5, the Company has raised funds
through various private offerings. These funds are initially being deposited
into a trust account held by the Companys lawyers prior to being transferred to
the Company. The balance held in trust as of September 30, 2007 amounted to
$949,779.

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- 11 -

NOTE 4  OIL AND GAS PROPERTIES

On October 18, 2006, the Company entered into an agreement to
purchase 1.5% of an overriding royalty in the City of Hobart lease located in
Oklahoma for $525,000 and 1,500,000 shares of its common stock. Under the terms
of the agreement, $375,000 was paid and 1,500,000 shares of the Companys common
stock were issued in October 2006, and the remaining $150,000 was paid in
January 2007. The Seller has agreed to drill a second well on the leased
property in consideration for an additional 1,000,000 shares of the Companys
common stock. As of September 30, 2007, the Company has not entered into the
agreement to drill the second well. The Company valued the 1,500,000 shares at
$1.00 per share based upon the share price being offered in its private
offerings.

On October 4, 2006, the Company entered into an agreement to
purchase a 45% undivided interest in 45 separate leases known as the Lokern in
addition to any leases taken in the prospect area. The Lokern leases are located
in California. The Company purchased its interest for $125,000 and 1,300,000
shares of common stock. The $125,000 was paid and 1,300,000 shares were issued
in October 2006. Under the terms of the purchase, the Company will receive 75%
of the net revenue produced by wells located on the leased properties. In
addition, the Company is responsible for its allocated share of all costs
associated with the leased properties including, but not limited to land, title,
lease bonuses, and drilling. The Company valued the 1,300,000 shares at $1.00
per share based upon the share price being offered in its private offerings.

On April 19, 2007, the Company entered into an agreement to
acquire a 5% working interest in certain leases and to receive certain rights
and privileges to approximately 9,440 acres of State of Louisiana leases. Along
with the leases and 3d seismic data relating to the Prospect, the acquisition
included ongoing rights to a larger Area of Mutual Interest. Under the terms of
the purchase, the Company will receive 3.5% of the net revenue produced by wells
located on the leased properties. In addition, the Company is responsible for
its allocated share of all costs associated with the leased properties
including, but not limited to land, title, lease bonuses, and drilling. The
purchase price of these leases is $640,000 in cash and 400,000 shares of the
Companys common stock. The Company valued the 400,000 shares at $1.00 per share
based upon the share price being offered in its private offerings.

On August 15, 2007, the Company entered into an agreement with
Desert Mining, Inc. to acquire a 100% working interest in 6,000 acres of leases
in the Jonah Field region of Wyoming. The Jonah Prospects are identified as
South Jonah, which consists of 2,477.68 acres and West Jonah, consisting of
3,546.89 acres. The acquisition was completed on September 5, 2007 by paying to
Desert Mining, Inc. an aggregate of $821,799.

NOTE 5  EQUITY

Common Stock

The Company is authorized to issue 750,000,000 shares of common
stock. Each shareholder of common is entitled to one vote. As indicated, the
accompanying financial statements include the combined activity of Sun Cal
Energy Inc. (the Company) and its wholly owned subsidiary, Sun Cal Energy
Corporation (SCEC) from the inception of both companies. Common stock
activities for both companies since inception, taking into account the Companys
10-for-1 stock split of November 6, 2006, are as follows:

On December 15, 2004, the Company issued 20,000,000 (2,000,000
pre-split) shares of its common stock to its founders for $2,000.

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- 12 -

In January and February 2005, the Company issued 28,250,000
(2,825,000 pre-split) shares of its common stock for $28,250.

In March 2005, the Company issued 3,000,000 (300,000 pre-split)
shares of its common stock for $15,000.

In August 2006, SCEC issued 23,000,000 shares of its common
stock to its founder for $23,000.

In October 2006, SCEC issued 625,000 shares of its common stock
for $625,000.

In October 2006, SCEC issued 2,800,000 shares of its common
stock as part consideration in its purchase of certain oil and gas leases. The
2,800,000 shares were valued at $2,825,000. See Note 4.

In December 2006, SCEC issued 500,000 shares of its common
stock for $500,000.

In January 2007, the Company issued 1,000,000 shares of its
common stock as part consideration in its purchase of certain oil and gas
leases. The 1,000,000 shares were valued at $1,000,000. See Note 4.

In March 2007, the Company acquired all of the 26,925,000
common shares of SCEC then issued and outstanding in consideration for issuing
to the shareholders of SCEC 26,925,000 common shares of its common stock.

In April 2007, the Company issued 200,000 shares of its common
stock for $200,000.

In April 2007, the Company issued 400,000 shares of its common
stock as part consideration in its purchase of certain oil and gas leases. The
400,000 shares were valued at $400,000. See Note 4.

In May 2007, the Company issued 700,000 shares of its common
stock for $700,000.

In May 2007, the Company issued 25,000 shares of its common
stock for services rendered by its President valued at $25,000.

On June 1, 2007, the Company issued 80,000 shares of its common
stock for $200,000. On June 14, 2007, the Company issued 150,000 shares of its
common stock for $300,000. On July 2007, the Company issued 100,000 shares of
its common stock for $250,000.

On August 2007, the Company issued 500,000 shares of its common
stock for $600,000.

On September 25, 2007, the Company issued 833,333 shares of its
common stock for $1,000,000.

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Warrants

The following is a summary of the outstanding warrants:

| |                                  |  |           |  |   | Weighted | 
| | -------------------------------- |  | --------- |  | - | -------- | 
| |                                  |  |           |  |   | Average  | 
| |                                  |  | Number of |  |   | Exercise | 
| |                                  |  | warrants  |  |   | Price    | 
| |                                  |  |           |  |   |          | 
| | Outstanding  June 30, 2007      |  | 2,255,000 |  | $ | 1.62     | 
| |                                  |  |           |  |   |          | 
| | Granted                          |  | 1,433,333 |  | $ | 1.70     | 
| | Exercised                        |  | --        |  |   | --       | 
| | Forfeited                        |  | --        |  |   | --       | 
| |                                  |  |           |  |   |          | 
| | Outstanding  September 30, 2007 |  | 3,688,333 |  | $ | 1.65     | 

The expiration date of the warrants range from two to three
years after date of grant with exercise prices ranging from $1.50 to $3.00 per
share.

NOTE 6  SUBSEQUENT EVENTS

On October 1, 2007, the Company entered into an agreement to
purchase a 5% overriding royalty interest on certain leases to be acquired by
seller located in the States of Alabama, Louisiana, Mississippi, Oklahoma, and
Texas. The purchase price of the royalty interest is $275,000. If the seller
does not acquire the royalty interest on the properties defined in the
agreement, the Company has the right to have the funds paid refunded or to have
the funds applied to other offering of the seller.

On October 24, 2007, the Company signed a Letter of Intent to
acquire a 100% working interest in 8,695 acres of leases in the Cherokee and
Forest City Basins of Kansas. The Letter of Intent was set to expire on October
31, 2007 but the Company is currently negotiating an extension of the Letter of
Intent with the counter party. The purchase price paid by the Company would
include (a) an upfront payment of $500,000; (b) the issuance of 6,916,667 shares
of common stock to the seller; (c) the granting of a 5% overriding royalty to
the seller on the Kansas assets; and (d) the assumption of $1,200,000 of the
sellers existing debt on the properties. Further, the Company would agree to
initiate plans to provide $2,000,000 in work over costs to develop the
properties within 6 months of the closing date. The Company is currently working
to close on mezzanine financing for $2,000,000 within 60 days of the closing
date of the purchase. If the Company does not initiate plans to provide
$2,000,000 in work over costs with the 6 months of the closing date, the seller
will retain a 12.5% overriding royalty on the Kansas assets until the $2,000,000
work over begins.

In October 2007, the Company issued 300,000 shares of its common
  stock to three advisors. Each advisor received 100,000 shares.

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Item 2. Managements Discussion and Analysis or Plan of
Operation.

FORWARD LOOKING STATEMENTS

This report contains forward-looking statements within the
meaning of Section 27A of the Securities Act and Section 21E of the Securities
Exchange Act. These statements relate to future events or our future financial
performance. In some cases, you can identify forward-looking statements by
terminology such as may, should, expects, plans, anticipates,
believes, estimates, predicts, potential or continue or the negative
of these terms or other comparable terminology. These statements are only
predictions and involve known and unknown risks, uncertainties and other
factors, including the risks in the section entitled Risk Factors, that may
cause our or our industrys actual results, levels of activity, performance or
achievements to be materially different from any future results, levels of
activity, performance or achievements expressed or implied by these
forward-looking statements.

Although we believe that the expectations reflected in the
forward-looking statements are reasonable, we cannot guarantee future results,
levels of activity, performance or achievements. Except as required by
applicable law, including the securities laws of the United States, we do not
intend to update any of the forward-looking statements to conform these
statements to actual results.

Our financial statements are stated in United States dollars
and are prepared in accordance with United States generally accepted accounting
principles. The following discussion should be read in conjunction with our
financial statements and the related notes that appear elsewhere in this
quarterly report.

In this quarterly report, unless otherwise specified, all
references to common shares refer to the common shares in our capital stock
and the terms we, us, our and Sun Cal mean Sun Cal Energy, Inc. and our
wholly-owned subsidiaries, Sun Cal Energy Corp., a Nevada corporation and Sun
Cal Energy Canada Corp., a British Columbia corporation.

Introduction

We were incorporated under the laws of the State of Nevada on
July 20, 2004 under the name Host Ventures, Inc. On November 6, 2006, we changed
our name to Sun Cal Energy, Inc. through a merger with our wholly owned
subsidiary, which was incorporated solely for the purpose of the merger.

We are an exploration stage company, which means we are
engaged in the search for mineral deposits (reserves) which are not in either
the development or production stage. We have not generated any revenues from our
operations and have achieved losses since our inception. We currently rely upon
the sale of our securities to fund operations.

Our Current Business

We are in the business of oil and gas exploration. Our
subsidiary, Sun Cal Energy Canada Corp. recently entered into two agreements: an
agreement with TriMar Energy Partners, Inc. to acquire an 1.5% of 8/8ths
overriding royalty interest in an oil and gas lease known as the Hobart Lease
and an agreement with Western Energy Capital, LLC. to acquire an undivided 45%
interest in certain oil and gas leases known as the Lokern Leases.

The Hobart Lease is an oil and gas lease obtained by TriMar
Energy Partners, Inc., as the lessee, from the City of Hobart, as the lessor, on
April 1, 2004, covering a total of 1,211.44 acres in the city of Hobart, Washita
County, Oklahoma.

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The Lokern Leases are a collection of 34 oil and gas
exploration leases entered into by Western Energy Capital, LLC. with various
private parties between November 2005 to May 2006. The location of these leases
are located in Kern County, California.

In addition to the interests in the Hobart Lease and the Lokern
Leases, we have also acquired a 5% working interest in the Britlind Prospect in
Louisiana, a 5% Overriding Royalty Interest in the Centurion Property in Texas
and a 100% working interest in the Jonah Propect in Wyoming. We also signed a
letter of intent to acquire a 100% working interest in certain leases in the
Cherokee and Forest City Basins of Kansas. This Letter of Intent was set to
expire on October 31, 2007 but we are currently still negotiating an extension
of this Letter of Intent with the counter party.

Since we are an exploration stage company, there is no
assurance that commercially viable resources or reserves exist on any of our
properties, and a great deal of further exploration will be required before a
final evaluation as to the economic and legal feasibility for our future
exploration is determined. To date, we have not discovered an economically
viable resource or reserve on any of our properties, and there is no assurance
that we will discover one.

Plan of Operations

The following discussion should be read in conjunction with our
financial statements and the related notes included herein. The following
discussion contains forward-looking statements that reflect our plans, estimates
and beliefs. Our actual results could differ materially from those discussed in
the forward looking statements. Factors that could cause or contribute to such
differences include, but are not limited to, those discussed below and elsewhere
in this current report, particularly in the section entitled Risk Factors in
this quarterly report.

The Hobart Lease

The Hobart Lease is an oil and gas lease obtained by TriMar
Energy Partners, Inc., as the lessee, from the City of Hobart, as the lessor,
dated April 1, 2004, and as recorded on Book 983, official records, Washita
County, Oklahoma, covering a total of 1,211.44 acres in the city of Hobart,
Washita County, Oklahoma. We paid a total of $525,000 and 1,500,000 shares of
common stock to TriMar Energy Partners, Inc. and its designates to earn the 1.5%
of 8/8ths overriding royalty interest in the Hobart Lease. We are currently
working with TriMar Energy Partners, Inc. on finalizing the assignment of the
overriding royalty interest to our company. Under the agreement, we were also
obligated to issue to TriMar Energy Partners, Inc. or its designates an
additional 1,000,000 shares of our common stock upon the written proposal of a
second well to be drilled on the Hobart Lease. Since such a written proposal has
been submitted, we have issued the additional 1,000,000 shares of our common
stock to the designates of TriMar Energy Partners, Inc.

On April 27, 2007, the operator on the Hobart Lease, Marathon
Oil, spudded and began drilling a deep development gas well on our Hobart Lease
interest in Washita county, Oklahoma. The well, the Sturgeon.1-11, was set to
test through the Springer formation and was targeting multiple pay zones. Up to
April 27, 2007, the Sturgeon 1-11 had successfully reached a depth of 17,400
feet with a total authorized depth of 20,000 feet. By May 30, 2007, well data
collection and evaluation were completed on the Sturgeon 1-11 well, which was
deemed commercially viable. The well reached a final depth of 19,990 feet on May
15, 2007 after slightly more than 3 months of drilling. To help evaluate the
amount of pay encountered in the well, an open hole logging suite consisting of
density, neutron, HRI induction, sonic, and gamma tools was run to a depth of
19,980 feet. The operator on the Hobart Lease, Marathon Oil, then ran production
casing to a depth of 19,978 feet. The drilling rig was then moved off location
and it is expected that completion operations will commence soon.

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- 16 -

On July 11, 2007, a second permit was filed and drilling and
testing of a second deep development well on our Hobart Prospect in Washita,
County, Oklahoma was scheduled to begin shortly. The proposed well, Cunningham
1-2, builds on the successful drilling of the Sturgeon 1-11 well also located in
the Hobart Prospect. On September 6, 2007, the second deep development gas well,
Cunningham 1-2, was spudded and drilling activities begun. The target depth was
the Springer Morrow, which has proved to be productive in Oklahoma and Texas. No
value has been assigned, pending definitive testing.

On August 28, 2007, Range Production company filed for a third
well to be drilled on our Hobart Prospect in Oklahoma. This development follows
the recent application for a permit to drill and test a second deep development
well, Cunningham 1-2, on its Hobart Prospect in Oklahoma. The proposed well also
builds on the successful drilling of the Sturgeon 1-11 well, also located in the
Hobart Prospect. Filed before the Corporation Commission of the State of
Oklahoma, Range Production Company is seeking to establish a 640-acre drilling
and spacing unit for a third scheduled well to be drilled in the Hobart
Prospect.

On October 24, 2007, we announced that drilling on the second
deep development gas well, Cunningham 1-02, reached a depth in excess of 14,000
feet. The target depth is 20,500 feet, and is being drilled by the same operator
of the Sturgeon 1-11.

The Lokern Leases

The Lokern Leases are a collection of 34 oil and gas
exploration leases entered into by Western Energy Capital, LLC. with various
private parties between November 2005 to May 2006. The location of these leases
are located in Kern County, California. We paid an aggregate of $125,000 and
1,300,000 shares of our common stock to Western Energy Capital, LLC and its
designates to acquire an undivided 45% of all rights, title and interests in the
Lokern Leases. Pursuant to this agreement, Western Energy Capital, LLC agrees
that all leases made part of the agreement will be executed and assigned to our
company in a timely manner and Western Energy Capital, LLC will issue our
company a standard joint operating agreement. All leases and assignments taken
by Western Energy Capital, LLC for our company shall call for Western Energy
Capital, LLC to deliver a 75% Net Revenue Interest to our company.

On June 15, 2007, we acquired additional 2-D seismic data
relating our Lokern Leases in California. Acquisition of the data will allow for
additional geophysical correlation and interpretation of our Lokern Leases and
allow our company to firm up well locations for drilling in 2007. The additional
seismic data will also provide insight into the reserve estimates of the
prospect. Regional 2-D seismic data is a key tool for oil and gas exploration
due to its affordability and wide area of coverage compared to 3-D data. The
acquisition of this data set is in line with our exploration program and
initiatives, and will allow greater marketability of our prospect to large
exploration and production companies.

Sun Cal Energy has the exclusive oil and gas rights for the
Lokern Prospect which comprises approximately 400 acres of prime land in the oil
and gas rich Kern County region of California. Our company owns a 45% Working
Interest and a 75% Net Revenue Interest in the prospect. On October 18, 2007, we
assigned back to a designate of Western Energy Capital, LLC a 5% overriding
royalty interest net to our 45% Working Interest for a net 2.25% overriding
royalty interest in the Lokern Prospect.

The Britlind Prospect Leases

On April 19, 2007, we entered into an agreement with Western
Energy Capital, LLC (Western) to acquire a partial interest in the Britlind
Prospect and leases situated in the prolific Breton Sound area, offshore
Louisiana. Western has originally entered into an agreement with BTE Energy, LLC
(BTE) whereby Western acquired a contractual interest in the Britlind Prospect
from BTE, including all rights

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- 17 -

and privileges to approximately 9,440 acres of State of
Louisiana leases, ownership interest in approximately 25 square miles of 3D
seismic data, and interests in certain hardware and software in conjunction with
the interpretation and display of the 3D seismic data. In April and May of 2007,
we paid an aggregate of $640,000 to Western Energy Capital, LLC pursuant to the
agreement for a 5% working interest in the Britlind Prospect lease interests,
seismic data, hardware and software and ongoing rights to an area of mutual
interest. We have also issued 400,000 shares of our common stock to a designate
of Western Energy Capital, LLC. It was also acknowledged that the Britlind
Prospect leases were originally acquired under the name of McGuinty Durham and
Associates and assignment of leasehold out of McGuinty Durham and Associates
will be made in due course. At such time Western Energy Capital will take
appropriate actions to assign the interest to our company. Also pursuant to this
agreement, we agreed to pay our proportionate share of all expenses, including
geological, rentals and additional leases, etc. from May 11, 2007 and on.

Overriding Royalty Interest in Ceturion Property

On October 1, 2007, we acquired a 5% Overriding Royalty
Interest in the Centurion Property from King Royalty Corporation pursuant to an
offering of royalty interests by King Royalty Corporation. The Centurion
Property combines more than 17,000 acres of producing oil and gas assets across
Texas, Oklahoma, Alabama, Louisiana and Mississippi. There are 153 producing
wells on the asset with more than 50 additional proven/undeveloped drilling
sites. Current production is comprised of 90% natural gas and 10% oil. As an
interest holder we are entitled to share in revenues generated from oil and/or
gas production from wells located on the Centurion Property. Approximately 90
days after the operators of the wells on the properties sell oil and gas
production to local purchasers, we are entitled to receive payment of revenues
generated by those wells attributable to our interest. However, we have no
control over when we receive our payment of revenues, as each operator has its
own internal policies and procedures regarding the transfer of ownership. As an
interest holder we have no responsibility for operating expenses incurred in
connection with the operation of wells on the properties. Lastly, we do not have
responsibility for liabilities to third parties resulting from operations on the
properties, which is the responsibility of the operators of the properties and
the owners of working interests.

The Jonah Prospects

On August 15, 2007, we entered into an agreement with Desert
Mining, Inc. to acquire a 100% working interest in 6,000 acres of leases in the
Jonah Field region of Wyoming. This is the fourth core exploration and
development region for our company. Our Jonah Prospects are identified as South
Jonah, which consists of 2,477.68 acres and West Jonah, consisting of 3,546.89
acres. We completed our acquisition on September 5, 2007 by paying to Desert
Mining, Inc. an aggregate of $821,799.

With current well spacing regulations, we believe we can drill
up to 37 wells on this acreage. With technology developed in the Jonah and
Pinedale fields, current completion techniques estimate gas in place between 1.0
and 3.0 BCF per well. As such, our management believes that South Jonah and West
Jonah could provide between 37 BCF and 111 BCF of potential recoverable
reserves.

The Jonah Field and the Pinedale Anticline are acknowledged as
the premier gas fields in the Rocky Mountains. These fields are located in
Wyoming's Greater Green River Basin. According to the Wyoming State Geological
Survey, the Greater Green River Basin contains approximately 26 TCF of natural
gas which is the largest reserve in the State. The Jonah Field is estimated to
contain 7 to 10 TCF of Natural Gas, which currently produces from more than 500
wells.

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Other Interest

On October 24, 2007, we signed a letter of intent to acquire a
100% working interest in certain leases in the Cherokee and Forest City Basins
of Kansas. This Letter of Intent was set to expire on October 31, 2007 but we
are currently still negotiating an extension of this Letter of Intent with the
counter party.

Cash Requirements

We have no revenues and have experienced losses since
inception. Our plan of operations for the next 12 months involves the
exploration of oil and gas properties under the two agreements held by Sun Cal
Energy Corp. as well as our interests in three other oil and gas exploration
properties.

As provided under the agreement with Western Energy Capital,
LLC on the Lokern Leases, we will be a joint working interest owner together
with Western Energy Capital, LLC for the Lokern Leases, and will be required to
pay our proportionate share of all land, title, lease bonuses and drilling
costs. In addition to the exploration activities on the oil and gas properties
under the two agreements held by Sun Cal Energy Corp., we will be required to
pay our proportionate share of all land, title, lease bonuses and drilling costs
for other properties in which we hold a working interest such as the Britlind
Prospect Leases and the Jonah Prospects. Furthermore, we will continue to seek
opportunities to acquire other oil and gas properties of merit.

Prior to completion of our exploration stage, we anticipate
that we will incur increased operating expenses without realizing any revenues.
We anticipate that we will expend approximately $360,000 in the next 12 months
for our operating expenses. We therefore expect to incur significant losses into
the foreseeable future. We recognize that if we are unable to generate
significant revenues from the exploration of our oil and gas properties in the
future, we will not be able to earn profits or continue operations. There is no
history upon which to base any assumption as to the likelihood that we will
prove successful, and we can provide no assurance that we will generate any
revenues or ever achieve profitability.

We will also need more funds if the costs of the exploration of
our oil and gas properties are greater than we have anticipated. We will also
require additional financing to sustain our business operations if we are not
successful in earning revenues. We currently do not have any arrangements for
further financing and we may not be able to obtain financing on commercially
reasonable terms or terms that are acceptable to us when it is required.

We recorded a net operating loss of $480,342 for the three
months ended September 30, 2007 and have an accumulated deficit of $1,184,375
since inception. As at September 30, 2007 we had cash of $988,766, and for the
next 12 months, management anticipates that the minimum cash requirements to
fund our proposed exploration program and our continued operations will be
$408,000.

Results of Operations

First Quarter and Three Month Summary

We have not earned any revenues from our incorporation on July
  20, 2004 to September 30, 2007. We incurred operating expenses in the amount
  of $480,342 for the three month period ended September 30, 2007, compared to
  $12,771 for the three month period ended September 30, 2006. This increase was
  due to the change of our business from a relatively inactive mineral exploration
  company to an oil and gas exploration company actively acquiring interests in
  various parts of the United States since March 2007. The principal component
  for the increase of our operating expenses for the three months ended September
  30, 2007 compared to the three months ended September 30, 2006 was increase
  in general and administrative expenses relating to the acquisition of various
  interests in oil and gas exploration properties.

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- 19 -

We incurred operating expenses of $1,183,794 for the period
from our inception on July 20, 2004 to September 30, 2007.

We have not attained profitable operations and are dependent
upon obtaining financing to pursue exploration activities.

Revenue

During the next 12 month period, we anticipate that we may
generate revenue from the overriding interests we owned in some of our
properties. However, we do not anticipate that that the revenues generated, if
any, would be sufficient for us to attain profitable operations. Accordingly, we
will be required to obtain additional financing in order to continue our plan of
operations. We believe that debt financing will not be an alternative for
funding additional phases of exploration as we do not have 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 or through
shareholder or related party loans. 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 exploration programs. In the absence of such
financing, we will not be able to continue exploration of our properties and our
business plan will fail. Even if we are successful in obtaining equity financing
to fund our exploration program, there is no assurance that we will obtain the
funding necessary to pursue any advanced exploration of our properties. If we do
not continue to obtain additional financing, we will be forced to abandon our
properties and our plan of operations

Liquidity and Financial Condition

At September 30, 2007, we had working capital of $767,909. At
September 30, 2007, our total current assets were $991,566 which consisted of
cash, cash held in trust and prepaid expenses. At September 30, 2007, our total
current liabilities were $223,657.

Future Financings

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

Since we are an exploration stage company, there is no
assurance that commercially viable resources or reserves exist on any of our
properties, and a great deal of further exploration will be required before a
final evaluation as to the economic and legal feasibility for our future
exploration is determined. To date, we have not discovered an economically
viable resource or reserve on any of our properties, and there is no assurance
that we will discover one.

Off-Balance Sheet Arrangements

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

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Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with
United States generally accepted accounting principles requires our management
to make estimates and assumptions that affect the reported amount of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
Our management routinely makes judgments and estimates about the effects of
matters that are inherently uncertain.

Our significant accounting policies are disclosed in Note 2 to
the unaudited financial statements included in this Quarterly Report on Form
10-QSB.

RISK FACTORS

Shares of our common stock are speculative, especially since we
are in the exploration-stage of our new business. We operate in a volatile
sector of business that involves numerous risks and uncertainties. The risks and
uncertainties described below are not the only ones we face. Other risks and
uncertainties, including those that we do not currently consider material, may
impair our business. If any of the risks discussed below actually occur, our
business, financial condition, operating results or cash flows could be
materially adversely affected. This could cause the trading price of our
securities to decline, and you may lose all or part of your investment.
Prospective investors should consider carefully the risk factors set out below.

Risks Related To Our Business

As our properties are in the exploration stage there can be
no assurance that we will establish commercial discoveries on our properties.

Exploration for economic reserves of oil and gas is subject to
a number of risk factors. While the rewards to an investor can be substantial if
an economically viable discovery is made, few of the properties that are
explored are ultimately developed into producing oil and/or gas wells. Our
properties are in the exploration stage only and are without proven reserves of
oil and gas. There can be no assurance that we will establish commercial
discoveries on any of our properties.

The potential profitability of oil and gas ventures depends
upon factors beyond the control of our company

The potential profitability of oil and gas properties is
dependent upon many factors beyond our control. For instance, world prices and
markets for oil and gas are unpredictable, highly volatile, potentially subject
to governmental fixing, pegging, controls, or any combination of these and other
factors, and respond to changes in domestic, international, political, social,
and economic environments. Additionally, due to world-wide economic uncertainty,
the availability and cost of funds for production and other expenses have become
increasingly difficult, if not impossible, to project. These changes and events
may materially affect our financial performance.

Adverse weather conditions can also hinder drilling operations.
A productive well may become uneconomic in the event water or other deleterious
substances are encountered which impair or prevent the production of oil and/or
gas from the well. In addition, production from any well may be unmarketable if
it is impregnated with water or other deleterious substances. The marketability
of oil and gas which may be acquired or discovered will be affected by numerous
factors beyond our control. These factors include the proximity and capacity of
oil and gas pipelines and processing equipment, market

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fluctuations of prices, taxes, royalties, land tenure,
allowable production and environmental protection. The extent of these factors
cannot be accurately predicted but the combination of these factors may result
in our company not receiving an adequate return on invested capital.

Competition in the oil and gas industry is highly
competitive and there is no assurance that we will be successful in acquiring
interests in oil and gas properties.

The oil and gas industry is intensely competitive. We compete
with numerous individuals and companies, including many major oil and gas
companies, which have substantially greater technical, financial and operational
resources and staffs. Accordingly, there is a high degree of competition for
desirable oil and gas properties for drilling operations and necessary drilling
equipment, as well as for access to funds. There can be no assurance that the
necessary funds can be raised or that any projected work will be completed.

The marketability of natural resources will be affected by
numerous factors beyond our control which may result in us not receiving an
adequate return on invested capital to be profitable or viable.

The marketability of natural resources which may be acquired or
discovered by us will be affected by numerous factors beyond our control. These
factors include market fluctuations in oil and gas pricing and demand, the
proximity and capacity of natural resource markets and processing equipment,
governmental regulations, land tenure, land use, regulation concerning the
importing and exporting of oil and gas and environmental protection regulations.
The exact effect of these factors cannot be accurately predicted, but the
combination of these factors may result in us not receiving an adequate return
on invested capital to be profitable or viable.

Oil and gas operations are subject to comprehensive
regulation which may cause substantial delays or require capital outlays in
excess of those anticipated causing an adverse effect on our company.

Oil and gas operations are subject to federal and local laws
relating to the protection of the environment, including laws regulating removal
of natural resources from the ground and the discharge of materials into the
environment. Oil and gas operations are also subject to federal and local laws
and regulations which seek to maintain health and safety standards by regulating
the design and use of drilling methods and equipment. Various permits from
government bodies are required for drilling operations to be conducted; no
assurance can be given that such permits will be received. No assurance can be
given that environmental standards imposed by federal or local authorities will
not be changed or that any such changes would not have material adverse effects
on our activities. Moreover, compliance with such laws may cause substantial
delays or require capital outlays in excess of those anticipated, thus causing
an adverse effect on us. Additionally, we may be subject to liability for
pollution or other environmental damages which it may elect not to insure
against due to prohibitive premium costs and other reasons.

Exploration and production activities are subject to certain
environmental regulations which may prevent or delay the commencement or
continuance of our operations.

In general, our exploration and production activities are
subject to certain federal and local laws and regulations relating to
environmental quality and pollution control. Such laws and regulations increase
the costs of these activities and may prevent or delay the commencement or
continuance of a given operation. Compliance with these laws and regulations has
not had a material effect on our operations or financial condition to date.
Specifically, we are subject to legislation regarding emissions into the
environment, water discharges and storage and disposition of hazardous wastes.
In addition, legislation has been enacted which requires well and facility sites
to be abandoned and reclaimed to the satisfaction of state authorities. However,
such laws and regulations are frequently changed and we are unable to predict
the

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ultimate cost of compliance. Generally, environmental
requirements do not appear to affect us any differently or to any greater or
lesser extent than other companies in the industry.

We believe that our operations comply, in all material
respects, with all applicable environmental regulations.

Risks Associated With Our Company

Our future is dependent upon our ability to obtain
financing. If we do not obtain such financing, we may have to cease our
exploration activities and investors could lose their entire investment.

There is no assurance that we will operate profitably or will
generate positive cash flow in the future. We will require additional financing
in order to proceed beyond the first few months of our exploration program. We
will also require additional financing for the fees we must pay to maintain our
status in relation to the rights to our properties and to pay the fees and
expenses necessary to become and operate as a public company. We will also need
more funds if the costs of the exploration of our oil and gas properties are
greater than we have anticipated. We will also require additional financing to
sustain our business operations if we are not successful in earning revenues. We
currently do not have any arrangements for further financing and we may not be
able to obtain financing on commercially reasonable terms or terms that are
acceptable to us when it is required. Our future is dependent upon our ability
to obtain financing. If we do not obtain such financing, our business could fail
and investors could lose their entire investment.

Because we may never earn revenues from our operations, our
business may fail and then investors may lose all of their investment in our
company.

We have no history of revenues from operations. We have never
had significant operations and have no significant assets. We have yet to
generate positive earnings and there can be no assurance that we will ever
operate profitably. Our company has a limited operating history and is in the
exploration stage. The success of our company is significantly dependent on the
uncertain events of the discovery and exploitation of oil and gas reserves on
our properties or selling the rights to exploit those oil and gas reserves. If
our business plan is not successful and we are not able to operate profitably,
then our stock may become worthless and investors may lose all of their
investment in our company.

Prior to completion of our exploration stage, we anticipate
that we will incur increased operating expenses without realizing any revenues.
We therefore expect to incur significant losses into the foreseeable future. We
recognize that if we are unable to generate significant revenues from the
exploration of our oil and gas properties in the future, we will not be able to
earn profits or continue operations. There is no history upon which to base any
assumption as to the likelihood that we will prove successful, and we can
provide no assurance that we will generate any revenues or ever achieve
profitability. If we are unsuccessful in addressing these risks, our business
will fail and investors may lose all of their investment in our company.

We have no employees other than our Chief Executive Officer,
Lewis Dillman, and our sole director and Chief Financial Officer, George
Drazenovic.

Our Chief Executive Officer, Lewis Dillman, and our Chief
Financial Officer and director, George Drazenovic, will be the only persons
responsible for our managerial responsibilities. As such, they will have
ultimate authority with respect to our business decisions, our disclosure and
our implementation of accounting controls and procedures. If Messrs. Dillman and
Drazenovic are unable to properly institution

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such procedures and comply with reporting obligation
requirements, our operations may be adversely impacted.

Our By-laws contain provisions indemnifying our officers and
  directors against all costs, charges and expenses incurred by them

Our By-laws contain provisions with respect to the
indemnification of our officers and directors against all costs, charges and
expenses, including an amount paid to settle an action or satisfy a judgment,
actually and reasonably incurred by him, including an amount paid to settle an
action or satisfy a judgment in a civil, criminal or administrative action or
proceeding to which he is made a party by reason of his being or having been one
of our directors or officers.

Investors' interests in our company will be diluted and
investors may suffer dilution in their net book value per share if we issue
additional shares or raise funds through the sale of equity securities

Our constating documents authorize the issuance of 750,000,000
shares of common stock with a par value of $0.001. In the event that we are
required to issue any additional shares or enter into private placements to
raise financing through the sale of equity securities, investors' interests in
our company will be diluted and investors may suffer dilution in their net book
value per share depending on the price at which such securities are sold. If we
issue any such additional shares, such issuances also will cause a reduction in
the proportionate ownership and voting power of all other shareholders. Further,
any such issuance may result in a change in our control.

Our By-laws do not contain anti-takeover provisions which
could result in a change of our management and directors if there is a take-over
of our company

We do not currently have a shareholder rights plan or any
anti-takeover provisions in our By-laws. Without any anti-takeover provisions,
there is no deterrent for a take-over of our company, which may result in a
change in our management and directors.

As a result of our sole director and officers being resident
of other countries other than the United States, investors may find it difficult
to enforce, within the United States, any judgments obtained against our company
or our director and officer

We do not currently maintain a permanent place of business
within the United States. In addition, our current sole director and officer is
a national and resident of a country other than the United States, and all or a
substantial portion of such person's assets are located outside the United
States. As a result, it may be difficult for investors to enforce within the
United States any judgments obtained against our company or our director and
officer, including judgments predicated upon the civil liability provisions of
the securities laws of the United States or any state thereof.

Risks Associated With Our Common Stock

We do not intend to pay dividends on any investment in the
shares of stock of our company.

We have never paid any cash dividends and currently do not
intend to pay any dividends for the foreseeable future. To the extent that we
require additional funding currently not provided for in our financing plan, our
funding sources may prohibit the payment of a dividend. Because we do not intend
to declare dividends, any gain on an investment in our company will need to come
through an increase in the stocks price. This may never happen and investors
may lose all of their investment in our company.

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Our stock is a penny stock. Trading of our stock may be
restricted by the SEC's penny stock regulations which may limit a stockholder's
ability to buy and sell our stock.

Our stock is a penny stock. The Securities and Exchange
Commission has adopted Rule 15g-9 which generally defines penny stock to be
any equity security that has a market price (as defined) less than $5.00 per
share or an exercise price of less than $5.00 per share, subject to certain
exceptions. Our securities are covered by the penny stock rules, which impose
additional sales practice requirements on broker-dealers who sell to persons
other than established customers and accredited investors. The term
accredited investor refers generally to institutions with assets in excess of
$5,000,000 or individuals with a net worth in excess of $1,000,000 or annual
income exceeding $200,000 or $300,000 jointly with their spouse. The penny stock
rules require a broker-dealer, prior to a transaction in a penny stock not
otherwise exempt from the rules, to deliver a standard risk disclosure document
in a form prepared by the SEC which provides information about penny stocks and
the nature and level of risks in the penny stock market. The broker-dealer also
must provide the customer with current bid and offer quotations for the penny
stock, the compensation of the broker-dealer and its salesperson in the
transaction and monthly account statements showing the market value of each
penny stock held in the customer's account. The bid and offer quotations, and
the broker-dealer and salesperson compensation information, must be given to the
customer orally or in writing prior to effecting the transaction and must be
given to the customer in writing before or with the customer's confirmation. In
addition, the penny stock rules require that prior to a transaction in a penny
stock not otherwise exempt from these rules, the broker-dealer must make a
special written determination that the penny stock is a suitable investment for
the purchaser and receive the purchaser's written agreement to the transaction.
These disclosure requirements may have the effect of reducing the level of
trading activity in the secondary market for the stock that is subject to these
penny stock rules. Consequently, these penny stock rules may affect the ability
of broker-dealers to trade our securities. We believe that the penny stock rules
discourage investor interest in and limit the marketability of our common stock.

FINRA sales practice requirements may also limit a
stockholder's ability to buy and sell our stock.

In addition to the "penny stock" rules described above, the
Financial Industry Regulatory Authority (FINRA) has adopted rules that require
that in recommending an investment to a customer, a broker-dealer must have
reasonable grounds for believing that the investment is suitable for that
customer. Prior to recommending speculative low priced securities to their
non-institutional customers, broker-dealers must make reasonable efforts to
obtain information about the customer's financial status, tax status, investment
objectives and other information. Under interpretations of these rules, FINRA
believes that there is a high probability that speculative low priced securities
will not be suitable for at least some customers. FINRA requirements make it
more difficult for broker-dealers to recommend that their customers buy our
common stock, which may limit your ability to buy and sell our stock and have an
adverse effect on the market for our shares.

Trading in our common stock on the OTC Bulletin Board is
limited and sporadic making it difficult for our shareholders to sell their
shares or liquidate their investments

Shares of our common stock are currently quoted on the OTC
Bulletin Board. The trading price of our common stock has been subject to wide
fluctuations. Trading prices of our common stock may fluctuate in response to a
number of factors, many of which will be beyond our control. The stock market
has generally experienced extreme price and volume fluctuations that have often
been unrelated or disproportionate to the operating performance of companies
with no current business operation. There can be no assurance that trading
prices and price earnings ratios previously experienced by our common stock will
be matched or maintained. These broad market and industry factors may adversely
affect the market price of our common stock, regardless of our operating
performance.

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In the past, following periods of volatility in the market
price of a company's securities, securities class-action litigation has often
been instituted. Such litigation, if instituted, could result in substantial
costs for us and a diversion of management's attention and resources.

Item 3. Controls and Procedures.

As required by Rule 13a-15 under the Exchange Act, we have
carried out an evaluation of the effectiveness of the design and operation of
our company's disclosure controls and procedures as of the end of the period
covered by this quarterly report, being September 30, 2007. This evaluation was
carried out under the supervision and with the participation of our company's
Chief Executive Officer and Chief Financial Officer. Based upon that evaluation,
our companys Chief Executive Officer and our Chief Financial Officer concluded
that our companys disclosure controls and procedures are effective as at the
end of the period covered by this report. There have been no changes in our
internal controls over financial reporting that have materially affected, or are
reasonably likely to materially affect our internal controls over financial
reporting.

Our management does not expect that our disclosure controls or
our internal controls over financial reporting will prevent all error and fraud.
A control system, no matter how well conceived and operated, can provide only
reasonable, but no absolute, assurance that the objectives of a control system
are met. Further, any control system reflects limitations on resources, and the
benefits of a control system must be considered relative to its costs. These
limitations also include the realities that judgments in decision-making can be
faulty and that breakdowns can occur because of simple error or mistake.
Additionally, controls can be circumvented by the individual acts of some
persons, by collusion of two or more people or by management override of a
control. A design of a control system is also based upon certain assumptions
about potential future conditions; over time, controls may become inadequate
because of changes in conditions, or the degree of compliance with the policies
or procedures may deteriorate. Because of the inherent limitations in a
cost-effective control system, misstatements due to error or fraud may occur and
may not be detected.

Disclosure controls and procedures are controls and other
procedures that are designed to ensure that information required to be disclosed
in our company's reports filed or submitted under the Exchange Act is recorded,
processed, summarized and reported, within the time periods specified in the
Securities and Exchange Commission's rules and forms. Disclosure controls and
procedures include controls and procedures designed to ensure that information
required to be disclosed in our company's reports filed under the Exchange Act
is accumulated and communicated to our president and treasurer as appropriate,
to allow timely decisions regarding required disclosure.

PART II  OTHER INFORMATION

Item 1. Legal Proceedings.

We are not party to any legal proceedings.

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

On July 28, 2007, we closed a private placement consisting of
100,000 units of our securities (the Units) at a price of US $2.50 per Unit
for aggregate proceeds of $250,000. Each Unit consists of one common share and
one share purchase warrant (a Warrant), with each Warrant exercisable into one
common share (a Warrant Share) at a price of US $3.00 per Warrant Share until
July 27, 2010. We issued the Units to a non-U.S. person (as that term is defined
in Regulation S of the Securities Act of

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- 26 -

1933) in an offshore transaction relying on Regulation S and/or
Section 4(2) of the Securities Act of 1933.

On August 30, 2007, we closed a private placement consisting of
500,000 units of our securities (the Units) at a price of US $1.20 per Unit
for aggregate proceeds of $600,000. Each Unit consists of one common share and
one share purchase warrant (a Warrant), with each Warrant exercisable into one
common share (a Warrant Share) at a price of US $1.60 per Warrant Share until
August 29, 2010. We issued the Units to a non-U.S. person (as that term is
defined in Regulation S of the Securities Act of 1933) in an offshore
transaction relying on Regulation S and/or Section 4(2) of the Securities Act of
1933.

On September 25, 2007, we closed a private placement consisting
of 833,333 units of our securities (the Units) at a price of US $1.20 per Unit
for aggregate proceeds of $1,000,000. Each Unit consists of one common share and
one share purchase warrant (a Warrant), with each Warrant exercisable into one
common share (a Warrant Share) at a price of US $1.60 per Warrant Share until
September 24, 2010. We issued the Units to a non-U.S. person (as that term is
defined in Regulation S of the Securities Act of 1933) in an offshore
transaction relying on Regulation S and/or Section 4(2) of the Securities Act of
1933.

Item 3. Default upon Senior Securities.

None.

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

None.

Item 5. Other Information.

None.

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- 27 -

Item 6. Exhibits.

The following exhibits, required by Item 601 of Regulation S-B,
are being filed as part of this quarterly report, or are incorporated by
reference where indicated:

Number
      Description3.1
      Articles of (Incorporation
          incorporated by reference to our registration statement on form SB-2
          filed on July 11, 2005)3.2
      Bylaws (incorporated by reference
          to our registration statement on form SB-2 filed on July 11, 2005)3.3
      Articles of Merger (incorporated
          by reference to our current report on Form 8-K filed on November 7,
          2006)3.4
      Certificate of Change (incorporated
          by reference to our current report on Form 8-K filed on November 7,
          2006)3.2
      Bylaws (incorporated by reference
          to our registration statement on form SB-2 filed on July 11, 2005)10.1
      Mineral property purchase
          agreement dated April 26, 2005 (incorporated by reference to our registration
          statement on form SB-2 filed on July 11, 2005)10.2
      Share Exchange Agreement dated
          January 31, 2007 (incorporated by reference to our current report on
          Form 8-K filed on March 22, 2007)10.3
      Letter Agreement dated October
          4, 2006 with Western Energy Capital, LLC for the acquisition of 45%
          working interest in the Lokern leases (incorporated by reference to
          our current report on Form 8-K filed on March 22, 2007)10.3
      Letter Agreement dated October
          18, 2006 with TriMar Energy Partners, Inc. for the acquisition of 1.5%
          of 8/8th Overriding Royalty Interest in the Hobart Lease (incorporated
          by reference to our current report on Form 8-K filed on March 22, 2007)10.4
      Consulting Agreement dated
          May 1, 2007 (incorporated by reference to our current report on Form
          8-K filed on May 7, 2007)10.5
      Letter Agreement dated April
          19, 2007 with Western Energy Capital, LLC for the acquisition of 5%
          working interest in the Britlind Prospect Leases (incorporated by reference
          to our annual report on Form 10-KSB filed on October 15, 2007)10.6
      Purchase and Sale Agreement
          between our company and King Royalty Corporation for the acquisition
          of 5% interest in the Centurion property (incorporated by reference
          to our annual report on Form 10-KSB filed on October 15, 2007)10.7
      Purchase and Sale Agreement
          between our company and Desert Mining, Inc. for the acquisition of interests
          in the Jonah property (incorporated by reference to our annual report
          on Form 10-KSB filed on October 15, 2007)14.1
      Code of Ethics (incorporated
          by reference to our annual report on Form 10-KSB filed on October 15,
          2007)16.1
      Letter re change in certifying
          accountant (incorporated by reference to our current report on Form
          8-K filed on February 13, 2007)21.1
      Sun Cal Energy, Corp. a Nevada
          company, 100% wholly-owned subsidiary31.1*
      CEO
          Certification pursuant to Rule 13a-14(a) under the Securities Exchange
          Act of 193431.2*
      CFO
          Certification pursuant to Rule 13a-14(a) under the Securities Exchange
          Act of 193432.1*
      CEO
          Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant
          to Section 906 of the Sarbanes- Oxley Act of 200232.2*
      CEO
          Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant
          to Section 906 of the Sarbanes- Oxley Act of 2002


*filed herewith

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- 28 -



SIGNATURES

In accordance with the requirements of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

SUN CAL ENERGY, INC.

By:

/s/ Lewis Dillman
  Lewis Dillman 
  Chief Executive Officer 
  (Principal Executive Officer) 
  November 16, 2007



By:

/s/ George Drazenovic
  George Drazenovic 
  Chief Financial Officer, and sole Director 
  (Principal Financial Officer and Principal Accounting Officer) 
  November 16, 2007

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