UNITED STATES
 SECURITIES AND EXCHANGE
COMMISSION
 Washington, D.C.
20549
  
 FORM 10-Q
 
 [ X ]
              QUARTERLY REPORT UNDER SECTION
      13 0R 15(d) OF THE SECURITIES EXCHANGE ACT OF
  1934
 
 For the quarterly period
ended March 31,
2008
 
 [ 
       ]
              TRANSITION REPORT UNDER SECTION
      13 0R 15(d) OF THE SECURITIES EXCHANGE ACT OF
  1934
 
 For the transition period
from_______to_______.
 
 Commission file number333-139312
  ROCK CITY ENERGY
      CORP.(Exact
      name of registrant
      as specified in itscharter)
  Nevada
                (State
      or other jurisdiction of
                incorporation
      or organization)
              20-5503984
                (I.R.S.
      Employer
                Identification
      No.)3416 Via Lido, 4th Floor,
      Newport Beach, California, 92663
                (Address
      of principal executive offices)877-587-2517
                (Issuer’s
      telephone number)____________________________________________________________
                (Former
      name, former address and former fiscal year, if changed since last
      report)
 
 Indicate by
checkmarkwhether 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. [ X ] 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” and “smaller reporting company in Rule 12b-2 of the Exchange
Act.
 Large
      accelerated filer
                  o
                  Accelerated
      filer
                  oNon-accelerated
      filer
                  o(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). [ X ] Yes [  ]
No
  Indicate
the number of shares outstanding of each of the issuer’s classes of common
stock, as of the latest practicable date.  As of May 14, 2008 the
registrant had 8,000,000 shares of common stock outstanding.
  1




PART
I - FINANCIAL INFORMATION





Item 1. Financial
Statements.




ROCK
CITY ENERGY CORP. (An
Exploration Stage Company) CONSOLIDATED
BALANCE SHEETS


March
      31,
              
              
              December
      31,2008
              
              
              2007(Unaudited)ASSETSCurrent
      assetsCash
              
              $
              408,629
              
              
              $
              472,108Total
      current assets
              
              
              408,629
              
              
              
              472,108Unproved
      oil and gas properties
              
              
              100
              
              
              
              100Total
      assets
              
              $
              408,729
              
              
              $
              472,208LIABILITIES
      AND STOCKHOLDERS' EQUITYCurrent
      liabilitiesAccounts
      payable
              
              $
              10,991
              
              
              $
              17,663Accrued
      liabilities
              
              
              1,479
              
              
              
              1,903Accrued
      professional fees
              
              
              21,885
              
              
              
              28,117Due
      to related party
              
              
              -
              
              
              
              8,007Total
      current liabilities
              
              
              34,355
              
              
              
              55,690Commitments
      and contingencies
              
              
              -
              
              
              
              -Minority
      interest
              
              
              38,238
              
              
              
              38,285Stockholders'
      equityPreferred
      Stock, 25,000,000 shares authorized; $0.001 par value,0
      shares issued and outstanding
              
              
              -
              
              
              
              -Common
      Stock, 200,000,000 shares authorized; $0.001 par value,8,000,000
      shares issued and outstanding at March 31, 2008 andDecember
      31, 2007
              
              
              8,000
              
              
              
              8,000Additional
      paid-in capital
              
              
              633,430
              
              
              
              633,430Accumulated
      deficit
              
              
              (305,294
              )
              
              
              (263,197
              )Total
      stockholders' equity
              
              
              336,136
              
              
              
              378,233Total
      liabilities and stockholders' equity
              
              $
              408,729
              
              
              $
              472,208




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




2




ROCK
CITY ENERGY CORP. (An
Exploration Stage Company) CONSOLIDATED
STATEMENTS OF OPERATIONS (UNAUDITED)


August
      10, 2006(Inception)
      toThree
      Months Ended
              
              
              March
      31,2008
              
              
              2007
              
              
              2008ExpensesAdministrative
      fees
              
              $
              22,500
              
              
              $
              -
              
              
              $
              30,450Bank
      charges
              
              
              316
              
              
              
              46
              
              
              
              1,148Office
              
              
              160
              
              
              
              1
              
              
              
              517Professional
              
              
              17,353
              
              
              
              -
              
              
              
              260,533Regulatory
              
              
              623
              
              
              
              28
              
              
              
              16,787Rent
              
              
              500
              
              
              
              -
              
              
              
              500Telephone
              
              
              692
              
              
              
              -
              
              
              
              692Total
      expenses
              
              
              42,144
              
              
              
              75
              
              
              
              310,627Other
      incomeInterest
              
              
              -
              
              
              
              -
              
              
              
              5,716Net
      loss before franchise tax and minority interest
              
              
              (42,144
              )
              
              
              (75
              )
              
              
              (304,911
              )Franchise
      tax
              
              
              -
              
              
              
              -
              
              
              
              (1,021
              )Net
      loss before minority interest
              
              
              (42,144
              )
              
              
              (75
              )
              
              
              (305,932
              )Minority
      interest
              
              
              47
              
              
              
              36
              
              
              
              638Net
      loss for the period
              
              $
              (42,097
              )
              
              $
              (39
              )
              
              $
              (305,294
              )Basic
      and diluted loss per share
              
              $
              (0.01
              )
              
              $
              (0.00
              )Basic
      and diluted weighted average shares outstanding
              
              
              8,000,000
              
              
              
              4,000,000




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




3




ROCK
CITY ENERGY CORP.


(An
Exploration Stage Company) CONSOLIDATED
STATEMENT OF STOCKHOLDERS' EQUITY FOR
THE PERIOD FROM AUGUST 10, 2006 (INCEPTION) THOUGH MARCH 31, 2008


Common
      Stock Issued
              
              
              Common
      Stock Subscribed
              
              
              AdditionalNumber
      of
              
              
              
              
              
              Number
      of
              
              
              
              
              
              Paid-In
              
              
              AccumulatedShares
              
              
              Amount
              
              
              Shares
              
              
              Amount
              
              
              Capital
              
              
              Deficit
              
              
              TotalBalance
      at August 10, 2006 (Inception)
              
              
              -
              
              
              $
              -
              
              
              
              -
              
              
              $
              -
              
              
              $
              -
              
              
              $
              -
              
              
              $
              -Issuance
      of common stock
              
              
              4,000,000
              
              
              
              4,000
              
              
              
              -
              
              
              
              -
              
              
              
              37,430
              
              
              
              -
              
              
              
              41,430Net
      loss
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (7,479
              )
              
              
              (7,479
              )Balance,
      December 31, 2006 (Audited)
              
              
              4,000,000
              
              
              
              4,000
              
              
              
              -
              
              
              
              -
              
              
              
              37,430
              
              
              
              (7,479
              )
              
              
              33,951Common
      stock subscribed
              
              
              -
              
              
              
              -
              
              
              
              4,000,000
              
              
              
              4,000,000
              
              
              
              -
              
              
              
              -
              
              
              
              -Net
      loss
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (39
              )
              
              
              (39
              )Balance,
      March 31, 2007 (Unaudited)
              
              
              4,000,000
              
              
              
              4,000
              
              
              
              4,000,000
              
              
              
              600,000
              
              
              
              37,430
              
              
              
              (7,518
              )
              
              
              33,912Issuance
      of common stock
              
              
              4,000,000
              
              
              
              4,000
              
              
              
              (4,000,000
              )
              
              
              (600,000
              )
              
              
              596,000
              
              
              
              -
              
              
              
              600,000Net
      loss
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (255,679
              )
              
              
              (255,679
              )Balance,
      December 31, 2007 (Audited)
              
              
              8,000,000
              
              
              
              8,000
              
              
              
              -
              
              
              
              -
              
              
              
              633,430
              
              
              
              (263,197
              )
              
              
              378,233Net
      loss
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (42,097
              )
              
              
              (42,097
              )Balance,
      March 31, 2008 (Unaudited)
              
              
              8,000,000
              
              
              $
              8,000
              
              
              
              -
              
              
              $
              600,000
              
              
              $
              633,430
              
              
              $
              (305,294
              )
              
              $
              336,136




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




4


ROCK
CITY ENERGY CORP.
 (An
Exploration Stage Company) CONSOLIDATED
STATEMENTS OF CASH FLOWS (UNAUDITED)


August
      10, 2006(Inception)
      toThree
      Months Ended March 31,
              
              
              March
      31,2008
              
              
              2007
              
              
              2008Cash
      flows from operating activities:Net
      loss
              
              $
              (42,097
              )
              
              $
              (39
              )
              
              $
              (305,294
              )Adjustments
      to reconcile net loss to net cashused
      in operating activities:Cash
      acquired on acquisition of subsidiary
              
              
              -
              
              
              
              -
              
              
              
              294Minority
      interest
              
              
              (47
              )
              
              
              (36
              )
              
              
              (638
              )Changes
      in operating assets and liabilities:Accounts
      payable
              
              
              (6,672
              )
              
              
              4
              
              
              
              (60,431
              )Accrued
      liabilities
              
              
              (424
              )
              
              
              -
              
              
              
              1,479Accrued
      professional fees
              
              
              (6,232
              )
              
              
              -
              
              
              
              21,885Due
      to related party
              
              
              (8,007
              )
              
              
              -
              
              
              
              (9,214
              )Net
      cash used in operating activities
              
              
              (63,479
              )
              
              
              (71
              )
              
              
              (351,919
              )Cash
      flows from investment activities:Proceeds
      from note receivable from related party
              
              
              -
              
              
              
              -
              
              
              
              160,548Net
      cash provided by investment activities
              
              
              -
              
              
              
              -
              
              
              
              160,548Cash
      flows from financing activities:Cash
      received on issuance of common stock
              
              
              -
              
              
              
              600,000
              
              
              
              600,000Net
      cash provided by financing activities
              
              
              -
              
              
              
              600,000
              
              
              
              600,000Net
      (decrease) increase in cash
              
              
              (63,479
              )
              
              
              599,929
              
              
              
              408,629Cash,
      beginning of period
              
              
              472,108
              
              
              
              100,291
              
              
              
              -Cash,
      end of period
              
              $
              408,629
              
              
              $
              700,220
              
              
              $
              408,629Supplemental
      cash flow information:Cash
      paid during the period for:Franchise
      taxes
              
              $
              -
              
              
              $
              -
              
              
              $
              1,021Interest
              
              $
              -
              
              
              $
              -
              
              
              $
              -Non-cash
      items:Common
      shares issued on acquisition of subsidiary
              
              $
              -
              
              
              $
              -
              
              
              $
              41,430Net
      assets acquired on acquisition of subsidiaries (net of
    cash)
              
              $
              -
              
              
              $
              -
              
              
              $
              (80,012
              )Minority
      interest
              
              $
              -
              
              
              $
              -
              
              
              $
              38,876




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




5


ROCK
CITY ENERGY CORP.
 (An
Exploration Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 MARCH 31, 2008


1.
              ORGANIZATION
      AND BASIS OF PRESENTATION
 
 Organization
 
 Rock City
Energy Corp. was incorporated in the State of Nevada on August 10, 2006 as
Vallenar Holdings, Inc. On August 24, 2006, Rock City acquired a 51.53% interest
in Vallenar Energy Corp., a company incorporated in the State of Nevada on
January 27, 1999. Vallenar owns all of Nathan Oil Operating Co. LLC, a company
organized in the State of Texas on October 31, 2001. Vallenar has a 99% interest
in Nathan Oil Partners LP, a limited partnership formed in the State of Texas on
October 31, 2001. Nathan Oil Operating Co. LLC has a 1% interest in Nathan Oil
Partners LP.
 
 Rock City
is involved in the oil and gas exploration business. Through Vallenar’s
subsidiary, Nathan Oil Partners LP, Rock City has an interest in several oil and
gas leases in the state of Texas. In these notes, the terms “Company”, “we”,
“us” or “our” mean Rock City Energy Corp. and its subsidiary whose operations
are included in these consolidated financial statements.
 
 Basis
of Presentation
 
 The
unaudited condensed consolidated financial statements included herein have been
prepared in accordance with accounting principles generally accepted in the
United States for interim financial information and with the instructions to
Form 10-Q.  They do not include all information and notes required by
generally accepted accounting principles for complete financial
statements.  However, except as disclosed herein, there have been no
material changes in the information disclosed in the notes to the audited
consolidated financial statements included on Form 10-KSB of Rock City Energy
Corp. for the year ended December 31, 2007.  In the opinion of
management, all adjustments (including normal recurring accruals) considered
necessary for a fair presentation have been included.  Operating
results for the three months ended March 31, 2008, are not necessarily
indicative of the results that may be expected for any other interim period or
the entire year.  For further information, these unaudited
consolidated financial statements and the related notes should be read in
conjunction with the Company’s audited consolidated financial statements for the
year ended December 31, 2007, included in the Company’s annual
report  on Form 10-KSB.
 
 Exploration
Stage
 
 These
consolidated financial statements and related notes are presented in accordance
with accounting principles generally accepted in the United States of America,
and are expressed in United States dollars. The Company has not produced any
revenues from its principal business and is an exploration stage company as
defined by Statement of Financial Accounting Standard (SFAS) No. 7.
 
 The
Company is in the early exploration stage. In an exploration stage company,
management devotes most of its time to conducting exploratory work and
developing its business. These consolidated financial statements have been
prepared on a going concern basis, which implies the Company will continue to
realize its assets and discharge its liabilities in the normal course of
business. The Company has never paid any dividends and is unlikely to pay
dividends or generate earnings in the immediate or foreseeable future. The
Company’s continuation as a going concern and its ability to emerge from the
exploration stage with any planned principal business activity is dependent upon
the continued financial support of its shareholders and its ability to obtain
the necessary equity financing and attain profitable operations.
  6
 ROCK
CITY ENERGY CORP.
 (An
Exploration Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 MARCH 31, 2008
 2.
              SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES
 
 A summary
of the Company’s significant accounting policies is included in the Company’s
Form 10-KSB dated and filed on March 31, 2008 for the fiscal year ended December
31, 2007.  Additional significant accounting policies that affect the
Company or that have been developed since December 31, 2007, are summarized
below.
 
 Reclassifications
 
 Certain
prior period amounts in the accompanying consolidated financial statements have
been reclassified to conform to the current period’s presentation. These
reclassifications had no effect on the consolidated results of operations or
financial position for any period presented.
 
 Recent
Accounting Pronouncements
 
 In
September 2006, the Financial Accounting Standards Board (FASB) issued SFAS
No. 157, Fair Value
Measurements (SFAS No. 157). SFAS No. 157 defines fair value,
establishes a framework for measuring fair value and enhances disclosures about
fair value measures required under other accounting pronouncements, but does not
change existing guidance as to whether or not an instrument is carried at fair
value. SFAS No. 157 was effective for the Company on January 1, 2008. The
adoption of SFAS 157 did not have a significant impact on our consolidated
financial statements.
  In
February 2007, the FASB issued SFAS No. 159 (SFAS 159), The Fair Value Option for Financial
Assets and Financial Liabilities—Including an amendment of FASB Statement
No. 115. SFAS 159 permits entities to choose to measure many
financial instruments and certain other items at fair value. Unrealized gains
and losses on items for which the fair value option has been elected will be
recognized in earnings at each subsequent reporting date. SFAS 159 was effective
for the Company on January 1, 2008.  The adoption of SFAS 159 did
not have a material impact on the Company’s consolidated financial statements as
the Company did not elect the fair value option for any of its financial assets
or liabilities.
  In
June 2007, the Emerging Issues Task Force (EITF) of the FASB reached a
consensus on Issue No. 07-3, Accounting for Nonrefundable Advance
Payments for Goods or Services Received for Use in Future Research and
Development Activities (EITF 07-3). EITF 07-3 requires that
non-refundable advance payments for goods or services that will be used or
rendered for future research and development activities must be deferred and
capitalized. As the related goods are delivered or the services are performed,
or when the goods or services are no longer expected to be provided, the
deferred amounts must be recognized as an expense. This issue is effective for
financial statements issued for fiscal years beginning after December 15,
2007 and earlier application is not permitted. This consensus is to be applied
prospectively for new contracts entered into on or after the effective date.
EITF 07-03 was effective for the Company on January 1, 2008. The adoption of
EITF 07-03 did not have a material effect on our consolidated financial
statements.
 
 In
February 2008 the FASB staff issued Staff Position No. 157-2 (FSP FAS 157-2)
Effective date of
FASB Statement No.157.FSP FAS 157-2 delayed the effective
date of SFAS 157 for non-financial assets and non-financial liabilities, except
for items that are recognized or disclosed at fair value in the financial
statements on a recurring basis.  The provisions of FSP FAS 157-2 will
be effective for the Company on January 1, 2009.
  7
 ROCK
CITY ENERGY CORP.
 (An
Exploration Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 MARCH 31, 2008
 2.
              SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES,
continued
 
 Recent
Accounting Pronouncements, continued
 
 In
March 2008, the FASB issued SFAS No. 161 (SFAS 161), Disclosures about Derivative
Instruments and Hedging Activities – An Amendment of FASB Statement No.
133(SFAS
133). This statement is intended to improve financial
reporting of derivative instruments and hedging activities by requiring enhanced
disclosures about (a) how and why an entity uses derivative instruments, (b) how
derivative instruments and related hedged items are accounted for under SFAS 133
and its related interpretations and (c) how derivative instruments and related
hedged items affect an entity’s financial position, financial performance and
cash flows. The provisions of SFAS 161 are effective for fiscal years beginning
after November 15, 2008.  SFAS 161 will be effective for the
Company on January 1, 2009.  The Company is currently evaluating the
impact adoption of SFAS 161 may have on its financial statement
disclosures.
 
 3.
              GOING
      CONCERN
 
 The
Company has accumulated a deficit of $305,294 since inception and will require
additional financing to fund and support its operations until it achieves
positive cash flows from operations. These factors raise substantial doubt about
the Company’s ability to continue as a going concern. The Company’s ability to
achieve and maintain profitability and positive cash flows is dependent upon its
ability to locate profitable oil and gas properties, generate revenues from oil
and gas production and control its drilling, production and operating costs. The
Company plans to mitigate its losses in future through its joint operating
agreement with a Texas oil and gas company (operator) whereby the operator has
agreed to initiate drilling operations on the oil and gas properties and pay the
exploration, drilling, completing, equipping and operating costs associated with
developing the oil and gas properties. Based upon current plans, the Company
expects to incur operating losses in future periods and there is no assurance
that the Company will be able to obtain additional financing, locate profitable
oil and gas properties, generate revenues from oil and gas production and
control its drilling, production or operating costs, or that the operator will
initiate drilling operations or pay for the exploration, drilling, completing,
equipping or operating costs associated with developing the oil and gas
properties. These consolidated financial statements do not include any
adjustments that might result from the realization of these
uncertainties.
  4.
              UNPROVED
      OIL AND GAS PROPERTIES
 
 The
Company has interests in eight oil and gas leases, comprising 9,191 gross acres
(8,233 net deep acres and 958 net shallow acres) in Edwards County in
Texas.
 
 The Deep
Allar Lease is one lease covering the rights to develop and extract hydrocarbons
from depths below 1,500 feet from approximately 7,750 acres.
 
 The
Baggett Leases are six leases covering the rights to develop and extract
hydrocarbons at any depth from approximately 651 acres.
 
 The
Driver Lease is one lease covering the rights to develop and extract
hydrocarbons at any depth from approximately 158 deep acres and 632 shallow
acres. The Company’s original Driver Lease, comprising 790 gross and net acres,
expired in February 2007. The Company’s operator obtained a new lease covering
the same acreage and has an undivided 80% (68.75% until November 2007) interest
in the mineral rights. The Company’s proportionate interest in this eighth lease
is 25% of the operator’s interest (158 acres) in the deep rights, or a net
interest of 20%, and 100% interest (632 acres) in the shallow rights, or a net
interest of 80%.
  8
 ROCK
CITY ENERGY CORP.
 (An
Exploration Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 MARCH 31, 2008
 4.
              UNPROVED
      OIL AND GAS PROPERTIES, continued
 
 All of
the leases include provisions that allow their primary terms to be extended for
so long as operations are conducted on the land with no cessation for more than
180 consecutive days in the case of the Deep Allar Lease and 60 consecutive days
in the case of the Driver Lease.  The Baggett Leases do not require
continuous development because the two wells on the property are
producing.  Operations are defined as drilling, testing, completing,
marketing, recompleting, deepening, plugging back or repairing of a well in
search for or in an endeavor to obtain production of oil, gas, sulphur or other
minerals, or the production of oil, gas, sulphur or other mineral, whether or
not in paying quantities.
 
 On May 8,
2006, the Company entered into a letter agreement dated April 3, 2006, with a
Texas oil and gas company (operator) for the development of the Company’s oil
and gas properties in Texas. Under the agreement, the operator can earn a 100%
leasehold interest in the leases to depths below 1,500 feet in exchange for
drilling until it has completed a well capable of producing hydrocarbons in
commercial quantities. When the operator has completed the first 10 wells and
recovered 100% of the costs to drill the wells (payout), the Company can back in
for a 25% working interest in the wells. On future wells, the Company can either
participate from the outset to earn a 25% working interest, or back in after
payout to earn a 6.25% working interest.
 
 Pursuant
to an assignment of oil and gas leases dated June 9, 2006, the Company assigned
all of its oil and gas leases, so far as they cover depths below 1,500 feet, to
the operator in exchange for the operator’s initiating drilling operations on
the land covered by the leases before the primary terms of the leases expire. If
the operator successfully completes a well capable of producing hydrocarbons in
commercial quantities, this assignment of oil and gas leases will become
permanent.
 
 Overriding
royalty interests in the oil and gas leases totaling between 5% and 8.33% of all
oil, gas and other minerals produced, were assigned to three parties, one a
related party, between October 4, 2002 and April 21, 2006 (see Note
5).
 
 The following table presents information regarding
the Company’s unproved property leasehold acquisition costs in the area
indicated:
  March
      31,
                2008
              
              
              December
      31,
                2007Texas
              
              $
              100
              
              
              $
              100
 
 The Company’s unproven properties are evaluated
periodically for the possibility of impairment. During the three months ended
March 31, 2008 and the year ended December 31, 2007, no impairment charges were
recorded against the unproven oil and gas properties.
  9
 ROCK
CITY ENERGY CORP.
 (An
Exploration Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 MARCH 31, 2008
 5.
              RELATED
      PARTY TRANSACTIONS
 
 Due
from Related Party
 
 At March
31, 2008 and December 31, 2007, the Company owed $0 and $8,007 to a company
controlled by an officer. During the three months ended March 31, 2008 and 2007
the Company paid $22,500 and $0 respectively, in administrative fees to this
company.
 
 Overriding
Royalty Interest
 
 The
president of the Company has overriding royalty interests in all oil, gas and
other minerals produced of 3.17%, in six of the oil and gas leases and 1.5%, in
one of the oil and gas leases (see Note 4).
 
 6.
              COMMON
      STOCK
 
 On August
24, 2006, the Company issued 4,000,000 common shares to Brek, its former parent,
in exchange for 5,312,500 shares of common stock and 733,333 shares of preferred
stock in Vallenar Energy Corp.
 
 On June
7, 2007 the Company issued 4,000,000 common shares at $0.15 per share to Brek,
its former parent, for cash of $600,000.
 
 7.
              COMMITMENTS
 
 Oil and Gas Commitments
 
 As is
customary in the oil and gas industry, the Company may at times have commitments
to preserve or earn certain acreage positions or wells. If the Company does not
pay such commitments, it may lose the acreage positions or wells.
 
 Lease
Commitments
 
 The
Company had no lease commitments at March 31, 2008 or December 31,
2007.




10





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





Forward-Looking
Statements





Certain
information included in this Form 10-Q and other materials filed or to be filed
by us with the Securities and Exchange Commission (as well as information
included in oral or written statements made by us or on our behalf), may contain
forward-looking statements about our current and expected prospects, performance
trends, growth plans, business goals and other matters.  These
statements may be contained in our filings with the Securities and Exchange
Commission, in our press releases, in other written communications, and in oral
statements made by or with the approval of one of our authorized
officers.  Words or phrases such as “believe,” “plan,” “will likely
result,” “expect,” “intend,” “will continue,” “is anticipated,” “estimate,”
“project,” “may,” “could,” “would,” “should,” and similar expressions are
intended to identify forward-looking statements.  These statements,
and any other statements that are not historical facts, are forward-looking
statements.





We have
identified important factors, risks and uncertainties that could cause our
actual results to differ materially from those projected in the forward-looking
statements made by us (see the section of our Form 10-KSB titled “Factors
Affecting our Business, Operating Results and Financial Condition” filed with
the Securities and Exchange Commission on March 31, 2008).  Some, but
not all, of these risks include, among other things:





·
            general
      economic conditions, because they may affect our ability to raise
      money,





·
            our
      reliance on Chesapeake Exploration Limited Partnership to successfully
      develop our oil and gas properties,





·
            our
      ability to raise enough money to continue our
  operations,





·
            changes
      in regulatory requirements that adversely affect our
    business,





·
            changes
      in the prices for oil and gas that adversely affect our business,
      and





·
            other
      uncertainties, all of which are difficult to predict and many of which are
      beyond our control.





Because
of these factors, risks and uncertainties, we caution against placing undue
reliance on forward-looking statements.  Although we believe that the
assumptions underlying forward-looking statements are reasonable, any of the
assumptions could be incorrect, and there can be no assurance that
forward-looking statements will prove to be accurate.





Forward-looking
statements speak only as of the date on which they are made.  We do
not undertake any obligation to modify or revise any forward-looking statement
to take into account or otherwise reflect subsequent events or circumstances
arising after the date that the forward-looking statement was made.




11


GENERAL
 
 You
should read this discussion and analysis in conjunction with our interim
unaudited consolidated financial statements and related notes included in this
Form 10-Q and the audited consolidated financial statements and related notes
included in our annual report on Form 10-KSB for the fiscal year ended December
31, 2007. The inclusion of supplementary analytical and related information in
this report may require us to make estimates and assumptions to enable us to
fairly present, in all material respects, our analysis of trends and
expectations with respect to our results of operations and financial position
taken as a whole.
 
 We are
involved in the oil and gas exploration business. Through our subsidiary we have
an interest in several oil and gas leases in the state of Texas.  We
assigned our leases to Chesapeake Exploration Limited
Partnership.  Chesapeake is the operator for the development of our
oil and gas properties.
 
 We are in
the early exploration stage. In an exploration stage company, management devotes
most of its time to conducting exploratory work and developing its business. Our
continuation as a going concern and our ability to emerge from the exploration
stage with our planned principal business activity is dependent upon our
continued financial support, ability to attain profitable operations and ability
to raise equity financing.
 
 “We”,
“us” or “our” where used throughout this discussion means Rock City Energy Corp.
and its subsidiaries.
 
 OVERVIEW
 
 We were
incorporated on August 10, 2006 as Vallenar Holdings, Inc. and changed our name
to Rock City Energy Corp. on January 26, 2007. On August 24, 2006, we acquired a
51.53% interest in Vallenar Energy Corp., a corporation organized in the State
of Nevada on January 27, 1999. Vallenar owns all of Nathan Oil Operating Co.
LLC, a limited liability company organized in the State of Texas on October 31,
2001. Nathan Oil Operating Co. LLC is the general partner of Nathan Oil Partners
LP, a limited partnership formed in the State of Texas on October 31, 2001.
Vallenar is the only limited partner.
 
 We are
involved in the oil and gas exploration business and through Vallenar’s
subsidiary, Nathan Oil Partners LP, we have an interest in several oil and gas
leases in the state of Texas.
 
 CRITICAL
ACCOUNTING POLICIES AND ESTIMATES
 
 The
preparation of consolidated financial statements that conform with generally
accepted accounting principles of the United States (GAAP) requires estimates
and assumptions that affect the reported amounts of assets and liabilities,
revenues and expenses, and related disclosures of contingent assets and
liabilities in the consolidated financial statements and accompanying notes. The
SEC has defined a company’s critical accounting policies as the ones that are
most important to the portrayal of the company’s financial condition and results
of operations, and that require the company to make its most difficult and
subjective estimates, often as a result of the need to make estimates of matters
that are inherently uncertain. Based on this definition, we have identified the
critical accounting policies and judgments addressed below. We also have other
key accounting policies, which involve the use of estimates, judgments, and
assumptions that are significant to understanding our results. Although we
believe that our estimates, assumptions, and judgments are reasonable, they are
based upon information presently available. Actual results may differ
significantly from these estimates under different assumptions, judgments, or
conditions.
  12
 
 Unproved
Oil and Gas Properties
 
 We follow
the full cost method of accounting whereby all costs related to the acquisition
and development of oil and gas leases and properties are capitalized into a
single cost center (full cost pool). These costs include lease acquisition
costs, geological and geophysical expenses, overhead directly related to
exploration and development activities, and the costs of drilling both
productive and non-productive wells. Proceeds from property sales are generally
credited to the full cost pool without recognizing a gain or a loss unless the
sale would significantly alter the relationship between capitalized costs and
the proved reserves attributable to these costs. A significant alteration would
typically involve a sale of 25% or more of the proved reserves related to a
single full cost pool. We did not incur any costs associated with production or
general corporate activities nor did we capitalize any internal costs at March
31, 2008 or at December 31, 2007.
 
 When we have exploration and
development costs we will capitalize them into a full cost pool. We will compute
depletion on the full cost pool using the units-of-production method based upon
estimated proven oil and gas reserves. We will withhold the costs of unproved
properties from the depletion base until we determine whether we can prove
reserves on the properties. We review the properties quarterly for impairment.
During the three months ended March 31, 2008 and 2007, we did not record any
impairment charges against our unproven oil and gas
properties.
 
 When we
have well costs, we will transfer the total well costs to the depletable pool
even when all targeted zones have not been fully evaluated. For depletion and
depreciation purposes, we will convert relative volumes of oil and gas
production and reserves at the energy equivalent rate of six thousand cubic feet
of natural gas to one barrel of crude oil.
 
 Under the
full cost method of accounting, capitalized oil and gas property costs less
accumulated depletion and net of deferred income taxes (full cost pool) may not
exceed a ceiling amount equal to the present value, discounted at 10%, of
estimated future net revenues from proved oil and gas reserves. Should the full
cost pool exceed this ceiling, an impairmentis recognized. The present value of estimated future net revenues is
computed by applying current oil and gas prices to estimated future production
of proved oil and gas reserves as of period-end, less estimated future
expenditures to be incurred in developing and producing the proved reserves
assuming that existing economic conditions continue. However, subsequent
commodity price increases may be used to calculate the ceiling
value.
 
 We will
accrue the future cash outflows associated with asset retirement obligations in
the balance sheet along with the cost, or estimated fair value, if lower, of
unproved properties and the cost of any properties not being amortized. At March
31, 2008 and December 31, 2007, we did not have any material asset retirement
obligations.
 
 Estimated
reserve quantities and future net cash flows have the most significant impact on
the results of operations because we use these reserve estimates in providing a
measure of the overall value of our oil and gas properties. Estimating
accumulations of gas and oil is complex and is not exact because of the numerous
uncertainties inherent in the process. The process relies on interpretations of
available geological, geophysical, engineering and production data. The extent,
quality and reliability of these technical data can vary. The process also
requires certain economic assumptions, some of which are mandated by the
Securities and Exchange Commission, such as gas and oil prices, drilling and
operating expenses, capital expenditures, taxes and the availability of funds.
The accuracy of a reserve estimate is a function of the quality and quantity of
available data, the interpretation of that data, the accuracy of various
mandated economic assumptions, and the judgment of the persons preparing the
estimate. We have not conducted a reserves estimate on our properties because
our operator is developing the properties and we have not yet earned our 25%
interest in the wells.
  13
 
 As
Chesapeake successfully develops the properties as the operator in accordance
with the terms of our agreement, Chesapeake is entitled to recover all of the
costs of drilling, completing, equipping and operating the first 10 wells.
Thereafter, we are entitled to a 25% working interest in Chesapeake’s interest
in the wells. Once we are entitled to our working interest, gas and oil prices,
revenue, taxes, development expenditures, operating expenses and reserves of
recoverable gas and oil most likely will vary from our estimates, and any
significant variance could materially affect the quantity and present value of
our reserves. We may adjust estimates of proved reserves to reflect production
history, acquisitions, divestitures, ownership interest revisions, results of
exploration and development and prevailing gas and oil prices. Our reserves
might be susceptible to drainage by operators on adjacent
properties.
  Concentration
of Credit Risk
 
 The
financial instrument that potentially subjects us to a significant concentration
of credit risk consists principally of cash. At March 31, 2008 and December 31,
2007, we had approximately $409,000 and $472,000, respectively in cash that was
not insured. This cash is on deposit with a major Canadian chartered bank. As
part of our cash management process, we perform periodic evaluations of the
relative credit standing of this financial institution. We have not experienced
any losses in cash balances and do not believe that our cash is exposed to any
significant credit risk.
 
 Recent
Accounting Pronouncements
 
 In
September 2006, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standard (SFAS) No. 157, Fair Value Measurements. SFAS
157 defines fair value, establishes a framework for measuring fair value and
enhances disclosures about fair value measures required under other accounting
pronouncements, but does not change existing guidance as to whether or not an
instrument is carried at fair value. SFAS No. 157 was effective for us on
January 1, 2008. The adoption of SFAS 157 did not have a material impact on our
consolidated financial statements.
  In
February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial
Assets and Financial Liabilities—Including an amendment of FASB Statement
No. 115. SFAS 159 permits entities to choose to measure many
financial instruments and certain other items at fair value. Unrealized gains
and losses on items for which the fair value option has been elected must be
recognized in earnings at each subsequent reporting date. SFAS 159 was effective
for us on January 1, 2008. The adoption of SFAS 159 did not have a material
impact on our consolidated financial statements as we did not elect the fair
value option for any of our financial assets or liabilities.
  In
June 2007, the Emerging Issues Task Force (EITF) of the FASB reached a
consensus on Issue No. 07-3, Accounting for Nonrefundable Advance
Payments for Goods or Services Received for Use in Future Research and
Development Activities. EITF 07-3 requires that non-refundable advance
payments for goods or services that will be used or rendered for future research
and development activities should be deferred and capitalized. As the related
goods are delivered or the services are performed, or when the goods or services
are no longer expected to be provided, the deferred amounts would be recognized
as an expense. This issue is effective for financial statements issued for
fiscal years beginning after December 15, 2007 and earlier application is
not permitted. This consensus is to be applied prospectively for new contracts
entered into on or after the effective date. EITF 07-03 was effective for us on
January 1, 2008. Adoption of the pronouncement did not have a material effect on
our consolidated financial statements.
 
 In
February 2008 the FASB staff issued Staff Position No. 157-2 (FSP FAS 157-2)
Effective date of
FASB Statement No.157.FSP FAS 157-2 delayed the effective
date of SFAS 157 for non-financial assets and non-financial liabilities, except
for items that are recognized or disclosed at fair value in the financial
statements on a recurring basis.  The provisions of FSP FAS 157-2 will
be effective for us on January 1, 2009.
 
 In
March 2008, the FASB issued SFAS No. 161 (SFAS 161), Disclosures about Derivative
Instruments and Hedging Activities – An Amendment of FASB Statement No.
133(SFAS
133). This statement is intended to improve financial
reporting of derivative instruments and hedging activities by requiring enhanced
disclosures about (a) how and why an entity uses derivative instruments, (b) how
derivative instruments and related hedged items are accounted for under SFAS 133
and its related interpretations and (c) how derivative instruments and related
hedged items affect an entity’s financial position, financial performance and
cash flows. The provisions of SFAS 161 are effective for fiscal years beginning
after November 15, 2008.  SFAS 161 will be effective for us
on January 1, 2009.  We are currently evaluating the impact adoption
of SFAS 161 may have on our financial statement disclosures.
  14
 
 OUR
OBJECTIVES AND AREAS OF FOCUS
  Through
Vallenar, we have interests in the deep zone in eight oil and gas leases and in
the shallow zone in seven oil and gas leases covering 9,191 gross acres (8,233
net deep acres and 958 net shallow acres) in the Rocksprings Prospect in the Val
Verde Basin of Edwards County, Texas. In this discussion, when we discuss the
deep rights, we mean the rights to develop and extract hydrocarbons from depths
below 1,500 feet; and the shallow rights mean the rights to develop and extract
hydrocarbons from the surface to 1,500 feet. The eight leases are designated,
for purposes of this discussion, as follows:
  ·
              The
      deep Allar lease refers to one lease conveying the rights to develop and
      extract hydrocarbons from depths below 1,500 feet on approximately
      7,749.644 acres.·
              The
      Baggett leases refer to six leases conveying the rights to develop and
      extract hydrocarbons at any depth from approximately 650.9
      acres.·
              The
      new Driver lease refers to one lease conveying the rights to develop and
      extract hydrocarbons at any depth from approximately 158 deep acres and
      632 shallow acres. The original Driver Lease, covering 790 gross and net
      acres, expired in February 2007. Chesapeake obtained a new lease covering
      the same acreage and has an undivided 80% interest in the mineral rights.
      Our proportionate interest in the new Driver lease is 25% of Chesapeake’s
      interest (158 acres) in the deep rights, or a net interest of 20%, and
      100% interest (632 acres) in the shallow rights, or a net interest of 80%.
      We have the right to a pro rata interest in any additional interest that
      Chesapeake acquires.
 
 All of
the leases include provisions that allow their primary terms to be extended for
so long as operations are conducted on the land with no cessation for more than
180 consecutive days in the case of the deep Allar lease and 60 consecutive days
in the case of the new Driver lease. The Baggett leases do not require
continuous development because the two wells on the property are
producing.  Operations are defined as drilling, testing, completing,
marketing, recompleting, deepening, plugging back or repairing of a well in
search for, or in an endeavor to obtain production of, oil, gas, sulphur or
other minerals, or the production of oil, gas, sulphur or other minerals,
whether or not in paying quantities.
 
 Our goal
is to develop our properties to fully exploit all of their resources, but we
have not been able to do this to date because we lack working capital. Our plan
is to earn revenue by assigning our rights to develop the properties covered by
our leases, rather than by undertaking the expense and the risk of the
exploration and development. Accordingly, on May 8, 2006, we entered into a
letter agreement with Chesapeake for the exploration and development of the deep
rights associated with the deep Allar lease, the Baggett leases and the original
Driver lease. In conjunction with the letter agreement, we executed an
assignment of the deep Allar lease and the deep rights included in the Baggett
leases and the original Driver lease (collectively, the assigned leases) to
Chesapeake on June 9, 2006. The assignment is subject to all the applicable
terms and provisions of the letter agreement.
 
 In the
letter agreement, Chesapeake agreed to initiate drilling operations on the land
covered by the assigned leases before the end of their primary terms in February
2007. If Chesapeake successfully completes a well capable of producing
hydrocarbons in commercial quantities, Chesapeake will perpetuate the assignment
of the assigned leases. No other specific provisions in the assignment govern
expiration or termination. We cannot guarantee that Chesapeake will successfully
develop the oil and gas reserves on the properties covered by the assigned
leases.
 
 If
Chesapeake successfully develops the properties in accordance with the terms of
the letter agreement, Chesapeake is entitled to recover all of the costs of
drilling, completing, equipping and operating the first 10 wells, otherwise
known as payout. Thereafter, we are entitled to a 25% working interest in
Chesapeake’s interest in the wells. We have the right to participate in any
wells that Chesapeake drills after the first 10, with a 25% working interest if
we elect to participate from the outset and pay our proportionate share of the
costs, or a 6.25% working interest after payout if we elect not to participate
and pay our proportionate share.
  15
 
 The
letter agreement permits us to propose a well if Chesapeake fails to begin
drilling a well on acreage covered by the assigned leases at least sixty days
before the expiration of the terms of the assigned leases. Chesapeake may
participate in any proposed well, so long as it consents within fifteen days of
our proposal.
  While we
retained the shallow rights to the Bagget and Driver leases and have, under the
terms of the letter agreement, the right to drill wells on the undeveloped
portion of the leased properties, we do not have the funds to develop these
rights.
 
 Under the
terms of the letter agreement, aside from initiating drilling operations,
Chesapeake is required to:
  ·
              obtain
      a 3-D seismic survey over the area covered by the assigned leases at its
      own expense,
 ·
              provide
      interpretive data relating to the acreage covered by the assigned leases,
      and, in the initial well, provide an array of logs, including a magnetic
      imaging log and sidewall cores in the shallow zone of the assigned
      leases,
 ·
              assign
      to us our proportionate interest in wellbores according to the level of
      participation that we have elected,
 ·
              transport
      our gas for $0.50/mcf (mcf means 1,000 cubic feet), which includes
      processing fees and costs, and market our gas for $0.03/mcf,
      and
 ·
              immediately
      begin building or procuring a pipeline to transport the gas to market once
      it has successfully completed a well capable of producing natural gas in
      commercial quantities.
  Chesapeake
has drilled four wells—two on the acreage covered by the Baggett leases, and two
on the acreage covered by the deep Allar lease. In 2007, Chesapeake paid shut in
royalties to perpetuate the terms of the Baggett leases and conducted continuous
operations to perpetuate the terms of the deep Allar lease. One of the wells on
the Allar acreage was completed as a dry hole, the second was connected to a
pipeline on January 10, 2008 and a third was started in April
2008.  The two wells on the Baggett leases were connected to a
pipeline on December 21, 2007, thus perpetuating the terms of the Baggett
leases. We have not yet received any payout information from Chesapeake.
Chesapeake has informed us that they intend to  continue to maintain
the 180-day continuous development provision on the Allar lease.
 
 Chesapeake
did not initiate drilling on the property covered by the original Driver lease
that we assigned to it. Instead, Chesapeake, through a partner, top-leased the
acreage covered by the original Driver lease to February 2010 but obtained only
an undivided 68.75% interest in the oil, gas and all other mineral rights. Our
proportionate interest in the new Driver lease is 25% of Chesapeake’s interest
in the deep rights and 100% of Chesapeake’s interest in the shallow rights. We
are entitled to our proportionate share of any additional interest that
Chesapeake acquires in the new Driver lease. Chesapeake informed us in November
2007 that they acquired an additional 11.25% interest in the new Driver lease,
for a total of 80%, which increases our interest in the deep rights to 20% and
in the shallow rights to 80%. We have not seen the agreement under which
Chesapeake takes its interest in the new Driver lease and are relying entirely
on the terms of the letter agreement and Chesapeake’s representations that we
have an interest in the new Driver lease.
 
 OPERATIONS
REVIEW
  We had a
net loss of $42,097 during the three months ended March 31, 2008. At March 31,
2008, we had a cash balance of $408,629. When our cash balance is offset against
our current obligations of $10,991 in accounts payable, $1,479 in accrued
liabilities and $21,885 in accrued professional fees, we are left with working
capital of $374,274 at March 31, 2008.
 
 If our
operating expenses increase significantly in the future as a result of our
further investment in oil and gas properties, then our cash and cash equivalents
may not be adequate to satisfy our working capital needs for the next twelve
months.
  16
 
 Going
Concern
 
 Our
independent registered public accounting firm has added an explanatory paragraph
to the audit opinion issued in connection with our consolidated financial
statements for the year ended December 31, 2007 which states that our ability to
achieve and maintain profitability and positive cash flow is dependent upon our
ability to locate profitable oil and gas properties, generate revenue from oil
and gas production and control our drilling, production and operating costs. We
plan to mitigate our losses in the future through the agreement with Chesapeake.
Based upon our current plans, we expect to incur operating losses in the future
and cannot assure you that we will be able to obtain additional financing,
locate profitable oil and gas properties, generate revenue from oil and gas
production or control drilling, production or operating costs, or that
Chesapeake will continue its drilling operations or pay for the exploration,
drilling, completing, equipping or operating costs associated with developing
the oil and gas properties. Our consolidated financial statements do not include
any adjustments that might be necessary if we are unable to continue as a going
concern.
 
 Related-party
transactions
 
 Administrative
Fees
 
 At March
31, 2008 and December 31, 2007, we owed $0 and $8,007 to a company controlled by
one of our officers for administrative fees. During the three months ended March
31, 2008 and 2007, we paid $22,500 and $0 in administrative fees to this
company.
 
 Overriding
Royalty Interest
 
 Our
president has overriding royalty interests in all oil, gas and other minerals
produced of 3.17% in six of the oil and gas leases and 1.5% in one of the oil
and gas leases as a result of an agreement made in 2001.
 
 Comparison
of the three months ended March 31, 2008 and 2007
 
 Overall
Results of Operations
 
 During
the three months ended March 31, 2008, we had a net loss of $42,097 compared to
a net loss of $39 for the three months ended March 31, 2007.  The
increase in net loss was primarily due to professional and administrative costs
that we have assumed since the spin-off from Brek Energy Corporation in November
2007.
 
 Expenses
 
 Our
operating expenses increased by $42,069 or 561% from $75 for the three months
ended March 31, 2007 to $42,144 for the three months ended March 31,
2008.  This increase was primarily due to approximate increases in
administrative fees of $23,000, for accounting services and professional fees of
$17,000 for regulatory compliance.
  We expect
our administrative fees and professional fees to increase due to the increase in
accounting and compliance requirements since the spin-off from Brek.
 
 LIQUIDITY
AND CAPITAL RESOURCES AND PLAN OF OPERATION
 
 Liquidity
and Capital Resources
  17
 
 In the
notes to our consolidated financial statements as of December 31, 2007, we
caution that our ability to continue as a going concern is uncertain. We have
not generated any revenue to cover our expenses and have accumulated a deficit
of $305,294. During the three months ended March 31, 2008, we used $63,479 in
cash for operating activities. On June 7, 2007, we issued 4,000,000 shares of
our common stock at $0.15 per share to Brek for $600,000 cash. The funds we
raised in this offering should be adequate to support our operations for the
next 12 months. We are in the early stage of exploration and we have not
produced any revenue from our oil and gas properties. Thus far, management has
devoted most of its time to conducting exploratory work and developing our
business. Our plans over the next twelve months include raising equity capital
and exploring and developing our properties through our agreement with
Chesapeake.
 
 We are
not certain that Chesapeake will be able to develop our properties, profitably
or at all. Since May 8, 2006, the date of the letter agreement with Chesapeake,
Chesapeake has begun drilling operations on the properties covered by seven
leases, built a pipeline and is selling  the gas produced. The
fluctuation of gas prices will impact the amount of revenue earned from the
leases. If the resources required to develop the wells are in high demand, the
development costs will increase, which will likely delay our earning any
revenue. We are dependent on Chesapeake to both produce the gas and buy the gas
produced. We cannot be certain that we will ever receive revenue from our
agreement with Chesapeake.
 
 The
following table summarizes our sources and uses of cash for the three months
ended March 31, 2008 and 2007:
  Sources
      and Uses of Cash2008
              
              2007Net
      cash provided by investment activities
              
              $
              —
              
              
              $
              —Net
      cash provided by financing activities
              
              
              —
              
              
              
              600,000Net
      cash used in operating activities
              
              
              (63,479
              )
              
              
              (71
              )Net (decrease) increase in cash
              
              $
              (63,479
              )
              
              $
              599,929
 
 Net
cash used in operating activities
 
 We spent
$63,479 in cash on operating activities during the three months ended March 31,
2008, primarily to fund our net loss of $42,097 and to pay down accounts payable
by $6,672, accrued liabilities by $424, accrued professional fees by $6,232 and
an amount due to a related party of $8,007.
 
 Net
cash used in investment activities
 
 During
the three months ended March 31, 2008, we had no investment
activities.
 
 Net
cash provided by financing activities
 
 During
the three months ended March 31, 2008, we had no financing
activities.
 
 Plan
of Operation
 
 Chesapeake
paid a shut-in royalty to extend the terms of the Baggett leases and has
conducted continuous operations on the deep Allar acreage. As a result of
Chesapeake’s actions, all of the acreage covered by the assigned leases has been
secured beyond the original termination dates of the leases. However, as noted
under the discussion titled “Our Objectives and Areas of Focus” above, in order
to continue the terms of the assigned leases beyond the original termination
dates, operations cannot cease for the periods of time specified in the leases.
During the period covered by this report, Chesapeake began operations for a
third well on the Allar acreage.  The primary term of the new Driver
lease expires in 2010, so no operations are required on the Driver acreage until
then.
  18
 
 We plan
to seek other oil and gas projects as our financial condition permits, and to
find experienced operators to develop the properties in exchange for a working
interest on terms similar to the agreement we have with Chesapeake.
 
 We have
no other operations. If our oil and gas leases are not successfully developed,
we will earn no revenue.
 
 In March
2007, we sold 4,000,000 shares of our common stock to Brek at a price of $0.15
per share for gross proceeds of $600,000. We estimate that our annual operating
costs will be about $150,000, which does not include the costs of acquiring
future oil and gas leases or properties. These costs are made up of our
administrative, legal and regulatory costs. Nathan’s operating costs are paid by
Vallenar. If Vallenar’s working capital is insufficient to meet its own and
Nathan’s operating costs, then Vallenar will be required to raise the funds
necessary to continue its and Nathan’s operations. If that were the case, we
would likely provide additional capital to Vallenar, either in the form of a
loan or through an investment in additional shares of Vallenar’s common stock.
However, we cannot guarantee that we will have the cash available if Vallenar or
Nathan needs money, or that we would be able obtain funding from a third
party.
 
 We cannot
guarantee that Chesapeake will successfully develop the oil and gas reserves on
the properties covered by the leases or that we will be able to rely on any
other source for cash to cover our cash requirements if we were unable to do so
with the cash we have on hand.
 
 We do not
expect to purchase a plant or any significant equipment or to have any
significant changes in the number of employees over the next twelve
months.
 
 OFF-BALANCE
SHEET ARRANGEMENTS
 
 We have
no off-balance sheet arrangements and no non-consolidated, special-purpose
entities.
 
 CONTINGENCIES AND COMMITMENTS
 
 We had no
contingencies or long-term commitments at March 31, 2008, and have none as of
the date of this filing.
 
 As is
customary in the oil and gas industry, we may at times have agreements to
preserve or earn acreage or wells. If we do not perform as required by the
agreements, which might require that we pay money or engage in operations such
as drilling wells, we could lose the acreage or wells.
 
 CONTRACTUAL
OBLIGATIONS
 
 We did
not have any contractual obligations at March 31, 2008, and do not have any as
of the date of this filing.
 
 INTERNAL
AND EXTERNAL SOURCES OF LIQUIDITY
 
 We have
funded our operations solely through the issuance of shares of our common stock.
We have no commitments for financing.
  INFLATION
 
 We do not
believe that inflation will have a material impact on our future
operations.
 
 Other
than as we have described in this discussion, we know of no trends, events or
uncertainties that could impact our revenues or liquidity.
  19


Item
3.  Quantitative and Qualitative Disclosures about Market
Risk.





As a
smaller reporting company, we are not required to include this
information.





Item
4.  Controls and Procedures.





Disclosure
Controls and Procedures





Richard
N. Jeffs, our chief executive officer and chief financial officer, has evaluated
the effectiveness of our disclosure controls and procedures (as such term is
defined in Rules 13a-15 and 15d-15 under the Securities Exchange Act of 1934
(the “Exchange Act”)) as of the end of the period covered by this quarterly
report (the “Evaluation Date”).  Based on such evaluation, Mr. Jeffs
has concluded that, as of the Evaluation Date, our disclosure controls and
procedures are effective to ensure that information required to be disclosed by
us in the reports that we file or submit under the Exchange Act is recorded,
processed, summarized and reported within the time periods specified in the
Securities and Exchange Commission’s rules and forms.





Item
4(T)





Changes
in Internal Control over Financial Reporting





During
the quarter of the fiscal year covered by this report, there were no changes to
our internal control over financial reporting 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.





Not
applicable





Item
1A.  Risk Factors.





Not
applicable





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





Not
applicable





Item
3.  Defaults Upon Senior Securities.





Not
applicable





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





Not
applicable




20




Item 5. Other Information
 
 Not
applicable


Item
6. Exhibits





Exhibit
      No.
            Title3.1
            Articles
      of Incorporation(1)3.2
            Bylaws(1)31.1
            Certification
      pursuant to Section 302 of the Sarbanes-Oxley Act of
  2002*31.2
            Certification
      pursuant to Section 302 of the Sarbanes-Oxley Act of
  2002*32.1
            Certification
      pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
      the Sarbanes-Oxley Act of 2002*32.2
            Certification
      pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
      the Sarbanes-Oxley Act of 2002*





(1)
            Incorporated
      by reference from the registrant’s registration statement on Form SB-2,
      SEC File No. 333-139312, filed with the Securities and Exchange Commission
      on December 13, 2006.*
            Filed
      herewith.




21




SIGNATURES





In
accordance with the requirements of the Securities Exchange Act of 1934, Rock
City Energy Corp. has caused this report to be signed on its behalf by the
undersigned duly authorized person.




ROCK
      CITY ENERGY CORP.Date:
      May 15, 2008
            By:
            /s/ Richard
      N. JeffsRichard
      N. JeffsDirector,
      President and Chief Financial Officer
              (Principal
      Executive Officer and
              Principal
      Financial Officer)






22