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 June
30, 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 August 12, 2008 theregistrant had 8,000,000 shares of common
stock outstanding.




PART
I - FINANCIAL INFORMATION
 
 Item 1. Financial
Statements.
  ROCK
CITY ENERGY CORP. (An
Exploration Stage Company) CONSOLIDATED
BALANCE SHEETS


June
      30,
                
                
                December
      31,2008
                
                
                2007(Unaudited)ASSETSCurrent
      assetsCash
                
                $
                346,686
                
                
                $
                472,108Prepaid
      Rent
                
                
                500
                
                
                
                -Total
      current assets
                
                
                347,186
                
                
                
                472,108Unproved
      oil and gas properties
                
                
                100
                
                
                
                100Total
      assets
                
                $
                347,286
                
                
                $
                472,208LIABILITIES
      AND STOCKHOLDERS' EQUITYCurrent
      liabilitiesAccounts
      payable
                
                $
                2,726
                
                
                $
                17,663Accrued
      liabilities
                
                
                627
                
                
                
                1,903Accrued
      professional fees
                
                
                13,802
                
                
                
                28,117Due
      to related party
                
                
                -
                
                
                
                8,007Total
      current liabilities
                
                
                17,155
                
                
                
                55,690Commitments
      and contingencies
                
                
                -
                
                
                
                -Minority
      interest
                
                
                38,113
                
                
                
                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 June 30, 2008 andDecember
      31, 2007
                
                
                8,000
                
                
                
                8,000Additional
      paid-in capital
                
                
                633,430
                
                
                
                633,430Deficit
      accumulated in the exploration stage
                
                
                (349,412
                )
                
                
                (263,197
                )Total
      stockholders' equity
                
                
                292,018
                
                
                
                378,233Total
      liabilities and stockholders' equity
                
                $
                347,286
                
                
                $
                472,208
 The
accompanying notes are an integral part of these consolidated financial
statements
  1
 ROCK
CITY ENERGY CORP.
 (An
Exploration Stage Company) CONSOLIDATED
STATEMENTS OF OPERATIONS (UNAUDITED)
 August
      10,2006(Inception)Three
      Months Ended June 30,
                
                
                Six
      Months Ended June 30,
                
                
                to
      June 30,2008
                
                
                2007
                
                
                2008
                
                
                2007
                
                
                2008ExpensesAdministrative
      fees
                
                $
                22,500
                
                
                $
                -
                
                
                $
                45,000
                
                
                $
                -
                
                
                $
                52,950Bank
      charges
                
                
                301
                
                
                
                37
                
                
                
                617
                
                
                
                84
                
                
                
                1,449Office
                
                
                100
                
                
                
                -
                
                
                
                260
                
                
                
                -
                
                
                
                617Professional
                
                
                18,544
                
                
                
                2,732
                
                
                
                35,897
                
                
                
                2,732
                
                
                
                279,077Regulatory
                
                
                49
                
                
                
                500
                
                
                
                672
                
                
                
                528
                
                
                
                16,836Rent
                
                
                1,500
                
                
                
                -
                
                
                
                2,000
                
                
                
                -
                
                
                
                2,000Telephone
                
                
                1,249
                
                
                
                -
                
                
                
                1,941
                
                
                
                -
                
                
                
                1,941Total
      expenses
                
                
                44,243
                
                
                
                3,269
                
                
                
                86,387
                
                
                
                3,344
                
                
                
                354,870Other
      incomeInterest
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                5,716Net
      loss before franchise tax and minority interest
                
                
                (44,243
                )
                
                
                (3,269
                )
                
                
                (86,387
                )
                
                
                (3,344
                )
                
                
                (349,154
                )Franchise
      tax
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                (1,021
                )Net
      loss before minority interest
                
                
                (44,243
                )
                
                
                (3,269
                )
                
                
                (86,387
                )
                
                
                (3,344
                )
                
                
                (350,175
                )Minority
      interest
                
                
                125
                
                
                
                807
                
                
                
                172
                
                
                
                843
                
                
                
                763Net
      loss for the period
                
                $
                (44,118
                )
                
                $
                (2,462
                )
                
                $
                (86,215
                )
                
                $
                (2,501
                )
                
                $
                (349,412
                )Basic
      and diluted loss per share
                
                $
                (0.01
                )
                
                $
                (0.00
                )
                
                $
                (0.01
                )
                
                $
                (0.00
                )Basic
      and diluted weighted average shares outstanding
                
                
                8,000,000
                
                
                
                5,010,989
                
                
                
                8,000,000
                
                
                
                4,508,287
   The
accompanying notes are an integral part of these consolidated financial
statements
  2
 
  ROCK
CITY ENERGY CORP. (An
Exploration Stage Company) CONSOLIDATED
STATEMENT OF STOCKHOLDERS' EQUITY FOR
THE PERIOD FROM AUGUST 10, 2006 (INCEPTION) THROUGH JUNE 30, 2008 (UNAUDITED)
 DeficitCommon
                
                
                
                
                
                AccumulatedStock
      Issued
                
                
                Additional
                
                
                in
      theNumber
      of
                
                
                
                
                
                Paid-In
                
                
                ExplorationShares
                
                
                Amount
                
                
                Capital
                
                
                Stage
                
                
                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
                
                
                4,000,000
                
                
                
                4,000
                
                
                
                37,430
                
                
                
                (7,479
                )
                
                
                33,951Issuance
      of common stock
                
                
                4,000,000
                
                
                
                4,000
                
                
                
                596,000
                
                
                
                -
                
                
                
                600,000Net
      loss
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                (2,501
                )
                
                
                (2,501
                )Balance,
      June 30, 2007
                
                
                8,000,000
                
                
                
                8,000
                
                
                
                633,430
                
                
                
                (9,980
                )
                
                
                631,450Net
      loss
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                (253,217
                )
                
                
                (253,217
                )Balance,
      December 31, 2007
                
                
                8,000,000
                
                
                
                8,000
                
                
                
                633,430
                
                
                
                (263,197
                )
                
                
                378,233Net
      loss
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                (86,215
                )
                
                
                (86,215
                )Balance
      June 30, 2008
                
                
                8,000,000
                
                
                $
                8,000
                
                
                $
                633,430
                
                
                $
                (349,412
                )
                
                $
                292,018
 The
accompanying notes are an integral part of these consolidated financial
statements
  3
 ROCK
CITY ENERGY CORP.
 (An
Exploration Stage Company) CONSOLIDATED
STATEMENTS OF CASH FLOWS (UNAUDITED)
 August
      10,2006(Inception)Six
      Months Ended June 30,
                    
                    
                    to
      June 30,2008
                    
                    
                    2007
                    
                    
                    2008Cash
      flows from operating activities:Net
      loss
                    
                    $
                    (86,215
                    )
                    
                    $
                    (2,501
                    )
                    
                    $
                    (349,412
                    )Adjustments
      to reconcile net loss to net cashused
      in operating activities:Cash
      acquired on acquisition of subsidiary
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    294Minority
      interest
                    
                    
                    (172
                    )
                    
                    
                    (843
                    )
                    
                    
                    (763
                    )Changes
      in operating assets and liabilities:Prepaid
      rent
                    
                    
                    (500
                    )
                    
                    
                    -
                    
                    
                    
                    (500
                    )Accounts
      payable
                    
                    
                    (14,937
                    )
                    
                    
                    1,668
                    
                    
                    
                    (68,696
                    )Accrued
      liabilities
                    
                    
                    (1,276
                    )
                    
                    
                    -
                    
                    
                    
                    627Accrued
      professional fees
                    
                    
                    (14,315
                    )
                    
                    
                    -
                    
                    
                    
                    13,802Due
      to related party
                    
                    
                    (8,007
                    )
                    
                    
                    1,605
                    
                    
                    
                    (9,214
                    )Net
      cash used in operating activities
                    
                    
                    (125,422
                    )
                    
                    
                    (71
                    )
                    
                    
                    (413,862
                    )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
                    
                    
                    (125,422
                    )
                    
                    
                    599,929
                    
                    
                    
                    346,686Cash,
      beginning of period
                    
                    
                    472,108
                    
                    
                    
                    100,291
                    
                    
                    
                    -Cash,
      end of period
                    
                    $
                    346,686
                    
                    
                    $
                    700,220
                    
                    
                    $
                    346,686Supplemental
      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
                    
                    $
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    38,113
 The
accompanying notes are an integral part of these consolidated financial
statements.
  4
  ROCK
CITY ENERGY CORP.
 (An
Exploration Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 JUNE
30, 2008
 (UNAUDITED)
  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 six months ended June 30, 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.
  5
 
 ROCK
CITY ENERGY CORP.
 (An
Exploration Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 JUNE
30, 2008
 (UNAUDITED)
 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.
  6
 
 ROCK
CITY ENERGY CORP.
 (An
Exploration Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 JUNE
30, 2008
 (UNAUDITED)
 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 consolidated financial statement
disclosures.
  In May,
2008, FASB issued SFAS No. 162 (SFAS 162), The Hierarchy of Generally Accepted
Accounting Principles. SFAS 162 identifies the sources of accounting
principles and the framework for selecting the principles used in the
preparation of financial statements of nongovernmental entities that are
presented in conformity with generally accepted accounting principles (GAAP) in
the United States (the GAAP hierarchy). SFAS 162 is effective 60 days following
the SEC's approval of the Public Company Accounting Oversight Board amendments
to AU Section 411, The Meaning
of Present Fairly in Conformity With Generally Accepted Accounting
Principles. The Company is currently reviewing the effect, if any; the
proposed guidance will have on its consolidated financial statements
disclosures.
  In May,
2008, FASB issued SFAS No. 163 (SFAS 163), Accounting for Financial Guarantee
Insurance Contracts—an interpretation of FASB Statement No.
60.  Diversity exists in practice in accounting for financial
guarantee insurance contracts by insurance enterprises under FASB Statement No.
60, Accounting and Reporting
by Insurance Enterprises. That diversity results in inconsistencies in
the recognition and measurement of claim liabilities because of differing views
about when a loss has been incurred under FASB Statement No. 5, Accounting for Contingencies.
This Statement requires that an insurance enterprise recognize a claim liability
prior to an event of default (insured event) when there is evidence that credit
deterioration has occurred in an insured financial obligation. This Statement
also clarifies how Statement 60 applies to financial guarantee insurance
contracts, including the recognition and measurement to be used to account for
premium revenue and claim liabilities. Those clarifications will increase
comparability in financial reporting of financial guarantee insurance contracts
by insurance enterprises. This Statement requires expanded disclosures about
financial guarantee insurance contracts. The accounting and disclosure
requirements of the Statement will improve the quality of information provided
to users of financial statements. SFAS 163 will be effective for financial
statements issued for fiscal years beginning after December 15, 2008, and
interim periods within those fiscal years; disclosure requirements in paragraphs
30(g) and 31 are effective for the first period (including interim periods)
beginning after May 23, 2008. We do not expect the adoption of SFAS 163 to have
a significant impact on our consolidated financial statements.
  7
 ROCK
CITY ENERGY CORP.
 (An
Exploration Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 JUNE
30, 2008
 (UNAUDITED)
 3.
                        GOING
      CONCERN
 
 The
Company has accumulated a deficit of $349,412 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% 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%.
 
 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 minerals, whether or
not in paying quantities.
  8
  ROCK
CITY ENERGY CORP.
 (An
Exploration Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 JUNE
30, 2008
 (UNAUDITED)
 4.
                        UNPROVED
      OIL AND GAS PROPERTIES, continued
 
 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:
 
 June
      30,
                          2008
                        
                        
                        December
      31,
                          2007Texas
                        
                        $
                        100
                        
                        
                        $
                        100
 
 The Company’s unproven properties are evaluated
periodically for the possibility of impairment. During the six months ended June
30, 2008 and the year ended December 31, 2007, no impairment charges were
recorded against the unproven oil and gas properties.
  5.
                        RELATED
      PARTY TRANSACTIONS
 
 Due
from Related Party
 
 At June
30, 2008 and December 31, 2007, the Company owed $0 and $8,007 respectively, to
a company controlled by an officer. During the six months ended June 30, 2008
and 2007 the Company paid $45,000 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).
  9
  ROCK
CITY ENERGY CORP.
 (An
Exploration Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 JUNE
30, 2008
 (UNAUDITED)
 6.
                        COMMON
      STOCK
 
 On August
24, 2006, the Company issued 4,000,000 common shares to Brek Energy Corporation,
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 June 30, 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.
 
 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.
  11
 
 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”).  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.  As stated above, we assigned our leases to Chesapeake which
acts as the operator for the development of our oil and gas
properties.
 
 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.
  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 June 30, 2008 or at
December 31, 2007.
  12
 
 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 six months ended June 30, 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
impairment is 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 June 30, 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.
  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 June 30, 2008 and
December 31, 2007, we had approximately $347,000 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.
  13
 
 Recent
Accounting Pronouncements
 
 Refer to
Note 2 of our Notes to Consolidated Financial Statements included in our Form
10-KSB for the fiscal year ended December 31, 2007 for a discussion of recent
accounting standards and pronouncements.  Accounting pronouncements
that have been issued or adopted subsequent to December 31, 2007 are described
below:
 
 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
  In May,
2008, FASB issued SFAS No. 162 (SFAS 162), The Hierarchy of Generally Accepted
Accounting Principles.  SFAS 162 identifies the sources of
accounting principles and the framework for selecting the principles used in the
preparation of financial statements of nongovernmental entities that are
presented in conformity with generally accepted accounting principles (GAAP) in
the United States (the GAAP hierarchy).  SFAS 162 is effective 60 days
following the SEC’s approval of the Public Company Accounting Oversight Board
amendments to AU Section 411, The Meaning of Present Fairly in
Conformity With Generally Accepted Accounting Principles.  We
are currently reviewing the effect, if any; the proposed guidance will have on
our consolidated financial statements disclosures.
  In May,
2008, FASB issued SFAS No. 163 (SFAS 163), Accounting for Financial Guarantee
Insurance Contracts—an interpretation of FASB Statement No.
60.  Diversity exists in practice in accounting for financial
guarantee insurance contracts by insurance enterprises under FASB Statement No.
60, Accounting and Reporting
by Insurance Enterprises.  That diversity results in
inconsistencies in the recognition and measurement of claim liabilities because
of differing views about when a loss has been incurred under FASB Statement No.
5, Accounting for
Contingencies.  This Statement requires that an insurance
enterprise recognize a claim liability prior to an event of default (insured
event) when there is evidence that credit deterioration has occurred in an
insured financial obligation.  This Statement also clarifies how
Statement 60 applies to financial guarantee insurance contracts, including the
recognition and measurement to be used to account for premium revenue and claim
liabilities.  Those clarifications will increase comparability in
financial reporting of financial guarantee insurance contracts by insurance
enterprises.  This Statement requires expanded disclosures about
financial guarantee insurance contracts.  The accounting and
disclosure requirements of the Statement will improve the quality of information
provided to users of financial statements.  SFAS 163 will be effective
for financial statements issued for fiscal years beginning after December 15,
2008, and interim periods within those fiscal years; disclosure requirements in
paragraphs 30(g) and 31 are effective for the first period (including interim
periods) beginning after May 23, 2008.  We do not expect the adoption
of SFAS 163 to have a significant impact on our consolidated financial
statements.
  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.
  15
 
 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.
 
 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.
 
 16
  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—and  is drilling a
fifth on the Allar lease.  In 2007, Chesapeake paid shut in royalties
to perpetuate the terms of the Baggett leases until they were connected to the
pipeline on December 21, 2007, 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 and is not yet
completed.  The two wells on the Baggett leases were connected to a
pipeline on December 21, 2007, thus perpetuating the terms of the Baggett
leases.  According to the payout information from Chesapeake, revenue
from the three producing wells has recovered approximately 8% of the drilling,
production and operating costs of all five wells, the average cost which is
almost $4 million to the date of this quarterly report.  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 $86,215 during the six months ended June 30, 2008.  At
June 30, 2008, we had cash of $346,686 and prepaid rent of $500.  When
our cash balance is offset against our current obligations of $2,726 in accounts
payable, $627 in accrued liabilities, and $13,802 in accrued professional fees,
we are left with working capital of $330,031 at June 30, 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.
 
 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 June
30, 2008 and December 31, 2007, we owed $0 and $8,007 respectively to a company
controlled by one of our officers for administrative fees.  During the
six months ended June 30, 2008 and 2007, we paid $45,000 and $0 respectively in
administrative fees to this company.
  17
 
 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.
 
 Comparisons
of the Three Months and Six Months ended June 30, 2008 and 2007
 
 Overall
Results of Operations
 
 During
the three months ended June 30, 2008, we had a net loss of $44,118 compared to a
net loss of $2,462 for the three months ended June 30, 2007.  This
increase was primarily due to an increase in our administrative and professional
fees as a result of our spin-off from Brek Energy Corp. in November
2007.
 
 During
the six months ended June 30, 2008 we had a net loss of $86,215 compared to a
net loss of $2,501 for the six months ended June 30, 2007 due to the increase in
our administrative and professional fees for regulatory compliance as a result
of our spin-off from Brek Energy Corp.
 
 Expenses
 
 Our
expenses increased by $40,974 from $3,269 for the three months ended June 30,
2007 to $44,243 for the three months ended June 30, 2008.  This
increase was primarily due to increases in administrative fees for accounting
and administrative services of $22,500 and an increase in professional fees of
$16,000 for regulatory compliance.
 
 Our
operating expenses increased by $83,043 from $3,344 for the six months ended
June 30, 2007 to $86,387 for the six months ended June 30, 2008.  This
increase was primarily due to increases in administrative fees for accounting
and administrative services of $45,000 and an increase in professional fees of
$33,165 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
 
 In the
notes to our consolidated financial statements as of December 31, 2007, we
cautioned 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 $349,412.  During the six months
ended June 30, 2008, we used $125,422 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, but has
recovered only 8% of the costs associated with the wells.  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.
  18
 
 The
following table summarizes our sources and uses of cash for the six months ended
June 30, 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
              
              
              (125,422
              )
              
              
              (71
              )Net increase (decrease) in cash
              
              $
              (125,422
              )
              
              $
              599,929
 
 Net
cash used in operating activities
 
 We spent
$125,422 in cash on operating activities during the six months ended June 30,
2008, primarily to fund our net loss of $86,215, prepay rent of $500, and to pay
down our accounts payable by $14,937, our accrued liabilities by $1,276, our
accrued professional fees by $14,315, and an amount due to a related party by
$8,007.
 
 Net
cash used in investment activities
 
 During
the six months ended June 30, 2008, we had no investment
activities.
 
 Net
cash provided by financing activities
 
 During
the six months ended June 30, 2008, we had no financing activities.
 
 Plan
of Operation
 
 Chesapeake
paid a shut-in royalty to extend the terms of the Baggett leases until the two
wells on the Baggett acreage were connected to the pipeline on December 21,
2007, 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.  This well is not yet completed.  The primary
term of the new Driver lease expires in 2010, so no operations are required on
the Driver acreage until then.
 
 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 $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.
  19
 
 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 June 30, 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 June 30, 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.
 
 TRENDS,
EVENTS AND UNCERTAINTIES
 
 Other
than as we have described in this discussion, we know of no trends, events or
uncertainties that could impact our revenues or liquidity.
 
 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.
  20
 
 Item
4 (T).  Controls and Procedures
 
 Changes
in Internal Controls
 
 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
 
 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:
      August 13, 2008
                By:
                /s/ Richard
      N. JeffsRichard
      N. Jeffs
                  Director, Chief
      Executive Officer andChief Financial Officer
                    (Principal
      Executive Officer andPrincipal
      Financial Officer)