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UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, DC 20549

FORM 10-QSB

[ x ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended May 31, 2007

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

Commission file number 333-1421-28

XTOL ENERGY INC.(Exact
name of registrant as specified in its charter)

|Nevada                                           | N/A                                 
|------------------------------------------------ | ------------------------------------
|(State or other jurisdiction of incorporation or | (I.R.S. Employer Identification No.)
|organization)                                    |                                     

Suite 600  595 Howe Street Vancouver, British
Columbia Canada V6C 2T5(Address of principal executive offices)

604-662-3910(Registrants telephone number,
including area code)

Not Applicable(Former name, former address
and former fiscal year, if changed since last report)

Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or
for such shorter period that the registrant was require 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 shell company
(as defined in Rule 12b-2 of the Exchange Act). [ ] Yes [ x ] No

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PRECEDING FIVE YEARS: Check whether the registrant has filed all
documents and reports required to be filed by Sections 12, 13 or 15(d) of the
Securities Exchange Act of 1934 subsequent to the distribution of securities
under a plan confirmed by a court. [ ] Yes [ ] No

APPLICABLE ONLY TO CORPORATE ISSUERS

As of July 25, 2007, the registrants outstanding common stock
consisted of 38,544,000 shares.

1

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PART I  FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

The unaudited interim financial statements of XTOL Energy Inc.
  (the “Company”, “XTOL”, “we”, “our”,
  “us”) follow. All currency references in this report are in US dollars
  unless otherwise noted.

2

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XTOL Energy Inc.
  (An Exploration Stage Company)

May 31, 2007

|                                  | Index
|--------------------------------- | -----
|                                  |      
|Balance Sheets                    | F-1  
|                                  |      
|Statements of Operations          | F-2  
|                                  |      
|Statements of Cash Flows          | F-3  
|                                  |      
|Notes to the Financial Statements | F-4  

---

|XTOL Energy Inc.              
|------------------------------
|(An Exploration Stage Company)
|Balance Sheets                
|(Expressed in US dollars)     

|                                                                            |  | May 31      |   |  | November 30, |  
|--------------------------------------------------------------------------- |  | ----------- | - |  | ------------ | -
|                                                                            |  | 2007        |   |  | 2006         |  
|                                                                            |  | $           |   |  | $            |  
|                                                                            |  | (unaudited) |   |  |              |  
|ASSETS                                                                      |  |             |   |  |              |  
|Current Assets                                                              |  |             |   |  |              |  
|Cash                                                                        |  | 302,287     |   |  | 99,602       |  
|Accrued revenue                                                             |  | 556         |   |  |             |  
|Prepaid expenses (Note 9)                                                   |  | 125,339     |   |  | 224,432      |  
|Total Current Assets                                                        |  | 428,182     |   |  | 324,034      |  
|Property and Equipment (Note 3)                                             |  | 2,261       |   |  | 2,826        |  
|Oil and Gas Property
      (Note 4)                                         |  | 32,436      |   |  | 34,038       |  
|Total Assets                                                                |  | 462,879     |   |  | 360,898      |  
|                                                                            |  |             |   |  |              |  
|LIABILITIES AND STOCKHOLDERS EQUITY                                        |  |             |   |  |              |  
|Current Liabilities                                                         |  |             |   |  |              |  
|Accounts payable                                                            |  | 14,235      |   |  | 5,902        |  
|Accrued liabilities                                                         |  | 6,890       |   |  | 5,873        |  
|Due to related party (Note 5(b))                                            |  | 796         |   |  |             |  
|Total Liabilities                                                           |  | 21,921      |   |  | 11,775       |  
|Contingencies and Commitments (Notes 1 and
      9)                         |  |             |   |  |              |  
|Stockholders Equity                                                        |  |             |   |  |              |  
|Preferred Stock, 20,000,000 shares authorized,
      $0.0001 par value;     |  |             |   |  |              |  
|None issued and outstanding                                                 |  |            |   |  |             |  
|Common Stock, 80,000,000 shares authorized,
      $0.0001 par value;        |  |             |   |  |              |  
|38,082,000 and 37,892,000 shares issued and outstanding,
      respectively |  | 3,808       |   |  | 3,789        |  
|Additional Paid-in Capital                                                  |  | 465,992     |   |  | 390,011      |  
|Common Stock Subscribed (Note 6)                                            |  | 208,000     |   |  | 2,500        |  
|Donated Capital (Note 5(a))                                                 |  | 18,750      |   |  | 11,250       |  
|Deficit Accumulated
      During the Exploration Stage                      |  | (255,592    | ) |  | (58,427      | )
|Total Stockholders Equity                                                  |  | 440,958     |   |  | 349,123      |  
|Total Liabilities
      and Stockholders Equity                            |  | 462,879     |   |  | 360,898      |  

(The Accompanying Notes are an Integral Part of These Financial
  Statements)

F-1

---

|XTOL Energy Inc.              
|------------------------------
|(An Exploration Stage Company)
|Statements of Operations      
|(Expressed in US dollars)     
|(Unaudited)                   

|                                             |  | Accumulated from    |   |  | For the      |   |  | For the      |   |  | For the    |   |  | Period from         |  
|-------------------------------------------- |  | ------------------- | - |  | ------------ | - |  | ------------ | - |  | ---------- | - |  | ------------------- | -
|                                             |  | February 14, 2006   |   |  | Three Months |   |  | Three Months |   |  | Six Months |   |  | February 14, 2006   |  
|                                             |  | (Date of Inception) |   |  | Ended        |   |  | Ended        |   |  | Ended      |   |  | (Date of Inception) |  
|                                             |  | to May 31,          |   |  | May 31,      |   |  | May 31,      |   |  | May 31,    |   |  | to May 31,          |  
|                                             |  | 2007                |   |  | 2007         |   |  | 2006         |   |  | 2007       |   |  | 2006                |  
|                                             |  | $                   |   |  | $            |   |  | $            |   |  | $          |   |  | $                   |  
|                                             |  |                     |   |  |              |   |  |              |   |  |            |   |  |                     |  
|Revenue                                      |  | 1,746               |   |  | 819          |   |  |             |   |  | 1,746      |   |  |                    |  
|Expenses                                     |  |                     |   |  |              |   |  |              |   |  |            |   |  |                     |  
|Depletion and depreciation                   |  | 2,732               |   |  | 1,303        |   |  |             |   |  | 2,167      |   |  |                    |  
|General and
      administrative (Note 5(a)) |  | 254,606             |   |  | 92,199       |   |  | 12,932       |   |  | 196,744    |   |  | 12,932              |  
|Total Expenses                               |  | 257,338             |   |  | 93,502       |   |  | 12,932       |   |  | 198,911    |   |  | 12,932              |  
|Net Loss                                     |  | (255,592            | ) |  | (92,683      | ) |  | (12,932      | ) |  | (197,165   | ) |  | (12,932             | )
|Net Loss Per Share  Basic and Diluted       |  |                     |   |  |             |   |  |             |   |  | (0.01      | ) |  |                    |  
|Weighted Average Shares
      Outstanding    |  |                     |   |  | 37,993,000   |   |  | 50,891,000   |   |  | 37,967,000 |   |  | 50,302,000          |  

(The Accompanying Notes are an Integral Part of These Financial
  Statements)

F-2

---

|XTOL Energy Inc.              
|------------------------------
|(An Exploration Stage Company)
|Statements of Cash Flows      
|(Expressed in US dollars)     
|(Unaudited)                   

|                                                                                  |  |            |   |  | Period from         |  
|--------------------------------------------------------------------------------- |  | ---------- | - |  | ------------------- | -
|                                                                                  |  | Six Months |   |  | February 14, 2006   |  
|                                                                                  |  | Ended      |   |  | (Date of Inception) |  
|                                                                                  |  | May 31,    |   |  | to May 31,          |  
|                                                                                  |  | 2007       |   |  | 2006                |  
|                                                                                  |  | $          |   |  | $                   |  
|                                                                                  |  |            |   |  |                     |  
|                                                                                  |  |            |   |  |                     |  
|Operating Activities                                                              |  |            |   |  |                     |  
|                                                                                  |  |            |   |  |                     |  
|Net loss                                                                          |  | (197,165   | ) |  | (12,932             | )
|                                                                                  |  |            |   |  |                     |  
|Adjustments to reconcile net loss to
      net cash used in operating activities: |  |            |   |  |                     |  
|Depletion and depreciation                                                        |  | 2,167      |   |  |                    |  
|Donated services
      and rent                                                   |  | 7,500      |   |  | 3,750               |  
|Stock-based compensation                                                          |  | 105,647    |   |  |                    |  
|                                                                                  |  |            |   |  |                     |  
|Changes in operating assets and liabilities                                       |  |            |   |  |                     |  
|Accrued revenue                                                                   |  | (556       | ) |  |                    |  
|Prepaid expenses                                                                  |  | (1,554     | ) |  |                    |  
|Accounts payable                                                                  |  | 8,333      |   |  | 332                 |  
|Accrued liabilities                                                               |  | 1,017      |   |  |                    |  
|Due to related party                                                              |  | 796        |   |  |                    |  
|                                                                                  |  |            |   |  |                     |  
|Net Cash Used in Operating Activities                                             |  | (73,815    | ) |  | (8,850              | )
|                                                                                  |  |            |   |  |                     |  
|Financing Activities                                                              |  |            |   |  |                     |  
|                                                                                  |  |            |   |  |                     |  
|Proceeds from issuance of common stock                                            |  | 70,000     |   |  | 113,800             |  
|Stock issuance costs                                                              |  | (1,500     | ) |  |                    |  
|Proceeds from common stock subscribed                                             |  | 208,000    |   |  |                    |  
|                                                                                  |  |            |   |  |                     |  
|Net Cash Provided by Financing Activities                                         |  | 276,500    |   |  | 113,800             |  
|                                                                                  |  |            |   |  |                     |  
|Increase in Cash                                                                  |  | 202,685    |   |  | 104,950             |  
|                                                                                  |  |            |   |  |                     |  
|Cash - Beginning of Period                                                        |  | 99,602     |   |  |                    |  
|                                                                                  |  |            |   |  |                     |  
|Cash - End of Period                                                              |  | 302,287    |   |  | 104,950             |  
|                                                                                  |  |            |   |  |                     |  
|                                                                                  |  |            |   |  |                     |  
|Supplemental Disclosures                                                          |  |            |   |  |                     |  
|                                                                                  |  |            |   |  |                     |  
|Interest paid                                                                     |  |           |   |  |                    |  
|Income taxes paid                                                                 |  |           |   |  |                    |  

(The Accompanying Notes are an Integral Part of These Financial
  Statements)

F-3

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|XTOL Energy Inc.                 
|---------------------------------
|(An Exploration Stage Company)   
|Notes to the Financial Statements
|(Expressed in US dollars)        
|(Unaudited)                      

|1. | Nature of Operations and Continuance of Business                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | The Company was incorporated in the State
        of Nevada on February 14, 2006. The Company is an Exploration Stage Company,
        as defined by Statement of Financial Accounting Standard (SFAS)
        No.7 Accounting and Reporting for Development Stage Enterprises.
        The Companys principal business is the acquisition and exploration
        of oil and gas properties located in the United States.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | These 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 not generated significant revenues since inception and
        has never paid any dividends and is unlikely to pay dividends or generate
        earnings in the immediate or foreseeable future. The continuation of the
        Company as a going concern is dependent upon the continued financial support
        from its shareholders, the ability of the Company to obtain necessary
        equity financing to continue operations, and the attainment of profitable
        operations. As at May 31, 2007, the Company has not generated significant
        revenue and has accumulated losses totaling $255,592 since inception.
        These factors raise substantial doubt regarding the Companys ability
        to continue as a going concern. These financial statements do not include
        any adjustments to the recoverability and classification of recorded asset
        amounts and classification of liabilities that might be necessary should
        the Company be unable to continue as a going concern.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | During the next twelve months, management
        plans to purchase additional non-operated interests in oil and gas properties,
        acquire a development stage exploration property and carry out an exploration
        program on acquired property. Management estimates expenditures of approximately
        $6,500,000 for acquisition and exploration costs on oil and gas interests
        and properties, and approximately $832,000 for other operational costs.
        The Company currently has no significant revenues and must rely on the
        sale of equity securities to fund operations. The Company will require
        significant additional financings in order to pursue exploration of any
        properties acquired. There is no assurance that the Company will be able
        to obtain the necessary financings to complete its objectives.                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|2. | Summary of Significant Accounting Policies                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | c)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | d)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | e)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

F-4

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|XTOL Energy Inc.                 
|---------------------------------
|(An Exploration Stage Company)   
|Notes to the Financial Statements
|(Expressed in US dollars)        
|(Unaudited)                      

|2. | Summary of Significant Accounting Policies
        (continued)
|-- | --------------------------------------------------------------
|   |                                                               
|   | f)                                                            
|   |                                                               
|   |                                                               
|   |                                                               
|   | g)                                                            
|   |                                                               
|   |                                                               
|   |                                                               
|   | h)                                                            
|   |                                                               
|   |                                                               
|   |                                                               
|   |                                                               
|   |                                                               
|   |                                                               
|   |                                                               
|   | i)                                                            
|   |                                                               
|   |                                                               

F-5

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|XTOL Energy Inc.                 
|---------------------------------
|(An Exploration Stage Company)   
|Notes to the Financial Statements
|(Expressed in US dollars)        
|(Unaudited)                      

|2. | Summary of Significant Accounting Policies
        (continued)
|-- | --------------------------------------------------------------
|   |                                                               
|   | j)                                                            
|   |                                                               
|   |                                                               
|   |                                                               
|   |                                                               
|   |                                                               
|   | k)                                                            
|   |                                                               
|   |                                                               
|   |                                                               
|   | l)                                                            
|   |                                                               
|   |                                                               
|   |                                                               
|   | l)                                                            
|   |                                                               
|   |                                                               
|   |                                                               
|   | m)                                                            
|   |                                                               
|   |                                                               
|   |                                                               
|   | n)                                                            
|   |                                                               
|   |                                                               

F-6

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|XTOL Energy Inc.                 
|---------------------------------
|(An Exploration Stage Company)   
|Notes to the Financial Statements
|(Expressed in US dollars)        
|(Unaudited)                      

|2. | Summary of Significant Accounting Policies
        (continued)
|-- | --------------------------------------------------------------
|   |                                                               
|   | n)                                                            
|   |                                                               
|   |                                                               
|   |                                                               
|   |                                                               
|   |                                                               
|   |                                                               
|   |                                                               
|   |                                                               
|   |                                                               
|   |                                                               

F-7

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|XTOL Energy Inc.                 
|---------------------------------
|(An Exploration Stage Company)   
|Notes to the Financial Statements
|(Expressed in US dollars)        
|(Unaudited)                      

|3. | Property and Equipment
|-- | ----------------------

May 31,
      November 30,2007
      2006Accumulated
      Net Carrying
      Net CarryingCost
      Depreciation
      Value
      Value$
      $
      $
      $Computer hardware
      3,391
      1,130
      2,261
      2,826


|4. | Oil and Gas Property
|-- | --------------------

| |                             | May 31,      | November 30,
| | --------------------------- | ------------ | ------------
| |                             | 2007         | 2006        
| |                             | Net Carrying | Net Carrying
| |                             | Value        | Value       
| |                             | $            | $           
| |                             |              |             
| | Proved Properties, Oklahoma |              |             
| |                             |              |             
| | Acquisition Costs           | 34,038       | 34,038      
| | Depletion                   | (1,602)      |            
| |                             |              |             
| | Net Carrying Value          | 32,436       | 34,038      

|   | On August 1, 2006, the Company acquired a
        2.34% non operating interest in three oil and gas wells located in Oklahoma
        for $34,038.
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                   
|5. | Related Party Transactions                                                                                                                        
|   |                                                                                                                                                   
|   | a)                                                                                                                                                
|   |                                                                                                                                                   
|   | b)                                                                                                                                                
|   |                                                                                                                                                   
|6. | Common Stock                                                                                                                                      
|   |                                                                                                                                                   
|   | a)                                                                                                                                                
|   |                                                                                                                                                   
|   | b)                                                                                                                                                
|   |                                                                                                                                                   
|   | c)                                                                                                                                                
|   |                                                                                                                                                   
|   | d)                                                                                                                                                
|   |                                                                                                                                                   
|   | e)                                                                                                                                                
|   |                                                                                                                                                   
|   | f)                                                                                                                                                
|   |                                                                                                                                                   
|   | g)                                                                                                                                                

F-8

---

|XTOL Energy Inc.                 
|---------------------------------
|(An Exploration Stage Company)   
|Notes to the Financial Statements
|(Expressed in US dollars)        
|(Unaudited)                      

|7. | Stock Options                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | On February 15, 2006, the Company granted 10,000,000
        stock options to the directors with an exercise price of $0.0001 per share
        and expiring on February 15, 2011. These stock options were fully vested
        as of the grant date. The fair value for these stock options was estimated
        at the date of grant using the Black-Scholes option- pricing model assuming
        an expected life of 5 years, a risk-free rate of 4.51%, an expected volatility
        of 97%, and a 0% dividend yield. The weighted average fair value of stock
        options granted was $0.0001 per share. As at May 31, 2007, there were
        no unvested stock options.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | A summary of the Companys stock option activity
        is as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

| |                                |            | Weighted | Weighted    
| | ------------------------------ | ---------- | -------- | ------------
| |                                |            | Average  | Average     
| |                                |            | Exercise | Remaining   
| |                                | Number of  | Price    | Contractual 
| |                                | Options    | $        | Life (years)
| |                                |            |          |             
| | Outstanding, November 30, 2006 | 10,000,000 | 0.0001   |             
| |                                |            |          |             
| | Granted                        |           |         |             
| |                                |            |          |             
| | Outstanding, May 31, 2007      | 10,000,000 | 0.0001   | 3.72        
| |                                |            |          |             
| | Exercisable, May 31, 2007      | 10,000,000 | 0.0001   | 3.72        

|8. | Share Purchase Warrants                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | On February 7, 2007, the Company issued 1,500 warrants
        at a fair value of $248 exercisable at $0.50 per share until February
        7, 2008. The fair value of the warrants was estimated at the date of issue
        using the Black-Scholes option-pricing model assuming an expected life
        of 1 year, a risk-free rate of 4.81%, an expected volatility of 81%, and
        a 0% dividend yield. The weighted average fair value of the warrants issued
        was $0.50 per share.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | The following table summarizes the continuity of the
        Companys share purchase warrants:                                                                                                                                                                                                                                                                                                                                                                                                         

| |                            |           | Weighted      
| | -------------------------- | --------- | --------------
| |                            |           | average       
| |                            | Number of | exercise price
| |                            | Warrants  | $             
| |                            |           |               
| | Balance, November 30, 2006 |          |               
| |                            |           |               
| | Issued                     | 1,500     | 0.50          
| |                            |           |               
| | Balance, May 31, 2007      | 1,500     | 0.50          

As at May 31, 2007, the following share
  purchase warrants were outstanding:

ExerciseNumber of
      PriceWarrants
      $
      Expiry Date1,500
      0.50
      February 7, 2008


|9. | Commitments
|-- | -----------
|   |            
|   | a)         

F-9

---

|XTOL Energy Inc.                 
|---------------------------------
|(An Exploration Stage Company)   
|Notes to the Financial Statements
|(Expressed in US dollars)        
|(Unaudited)                      

|    |                         | shares of common stock at a fair value of $5,000 pursuant
        to the Advisory Board Agreement with $2,500 included in prepaid expenses
        and the remaining amount charged to operations.                                                                                                                                                                                                              
|--- | ----------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                         |                                                                                                                                                                                                                                                                                                                                                                                                                 
|9.  | Commitments (continued)
|    |                         |                                                                                                                                                                                                                                                                                                                                                                                                                 
|    | b)                      | On November 29, 2006, the Company entered into a consulting
        agreement with a firm to provide consulting services to the Company for
        a period of 13 months in consideration for the issuance of 6,000,000 common
        shares at a fair value of $225,000. The 6,000,000 shares were issued on
        November 29, 2006. As at May 31, 2007, $121,285 is included in prepaid
        expenses.
|    |                         |                                                                                                                                                                                                                                                                                                                                                                                                                 
|10. | Subsequent Events      
|    |                         |                                                                                                                                                                                                                                                                                                                                                                                                                 
|    | a)                      | On June 4, 2007, the Company issued the 440,000 shares
        for unit subscriptions received as of May 31, 2007 as described in Notes
        6(f) and (g).                                                                                                                                                                                                                                                   
|    |                         |                                                                                                                                                                                                                                                                                                                                                                                                                 
|    | b)                      | On July 4, 2007, the Company issued 22,000 shares of common stock and
      46,200 warrants for unit subscriptions received as of May 31, 2007 as described
      in Notes 6(f) and (g).                                                                                                                                                                                                                        

F-10

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ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION/ PLAN OF OPERATIONS

Forward Looking Statements

This Quarterly Report on Form 10-QSB contains forward-looking
statements that involve risks and uncertainties. These statements relate to
future events or our future financial performance. In some cases, you can
identify forward-looking statements by terminology including, "could" "may",
"will", "should", "expect", "plan", "anticipate", "believe", "estimate",
"predict", "potential" and the negative of these terms or other comparable
terminology. These statements are only predictions. Actual events or results may
differ materially.

While these forward-looking statements, and any assumptions
upon which they are based, are made in good faith and reflect our current
judgment regarding the direction of our business, actual results will almost
always vary, sometimes materially, from any estimates, predictions, projections,
assumptions or other future performance suggested in this Quarterly Report.

Introduction

XTOL Energy Inc. (XTOL, we, us) is a start up oil and gas
exploration company. We have incurred losses since inception, have been issued a
going concern opinion by our auditors and rely upon the sale of our securities
to fund operations. We have only recently begun operations. In February 2007 we
received the first revenue from our 2.34% non operated interest in three
operating wells in Oklahoma.

We were incorporated as a Nevada company on February 14, 2006.
We are also extra-provincially registered in British Columbia, Canada. We do not
have any subsidiaries. Our principal office is located at Suite 600  595 Howe
Street, Vancouver, British Columbia, Canada, V6C 2T5. Our telephone number is
(604) 662-3910. Our fiscal year end is November 30.

We intend to build our business through the acquisition of
producing oil and natural gas wells, interests and leases. Our strategy is to
combine the secure and reliable revenue source of non-operated interest from
producing oil wells with the potential of an oil and gas exploration
project.

Our common stock became eligible for trading on the
NASDAQ-operated Over-the-Counter Bulletin Board (OTCBB) on Monday, July 9,
2007. Our shares will trade under the ticker symbol XTOL.OB.

The OTCBB is a regulated quotation service that displays
real-time quotes, last-sale prices and volume information for over-the-counter
equity securities. OTCBB securities are traded by a community of market makers
that enter quotes and trade through a sophisticated computer network.
Information on the OTCBB can be found at www.otcbb.com.

Overview

We are engaged in the acquisition of interests and leases of
producing oil and natural gas wells. Our plan of operations for the next twelve
months is to create revenue from non-operated interests of producing oil and gas
wells and to acquire an interest in, and further develop a development stage oil
and gas exploration project.

We have only recently begun our current operations and have not
yet earned any revenues and have accumulated net loss of $255,592 from February
14, 2006 (date of inception) to May 31, 2007.

3

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We have acquired a 2.34% interest in three wells in Kingfisher
County, Oklahoma. We do not yet have any exploration projects. We need capital
to carry out our current business plan. We also anticipate that we will require
additional financing in order to pursue full exploration of our acquired claims.
We may not have sufficient financing to undertake our current and future
business and there is no assurance that we will be able to obtain the necessary
financing.

We are a start-up stage corporation with limited operations and
limited revenues from our business operations. Our auditors have issued us with
a going concern opinion. This means that our auditors believe there is
substantial doubt that we can continue as an on-going business for the next
twelve months unless we obtain additional capital to pay our bills. Our only
source of cash at this time is investments by others in our company. We must
raise cash to implement our plan of operation.

Results of Operations

We began to earn nominal revenues in February 2007 from our
non-operated working interests in three producing wells. We plan to purchase
additional non-operated working interests in existing leases. However, we
anticipate that we will incur substantial losses over the next two years.

For the three months ended May 31, 2007, we generated revenues
  of $819 compared to no revenues for the same period in 2006. From our inception
  on February 14, 2006 to May 31, 2007 we accumulated a net loss of $255,592.
  For the three months ended May 31, 2007 we incurred net loss of $92,683 compared
  to our net loss of $12,932 for the same period in 2006. As of May 31, 2007,
  we had $302,287 in our bank accounts compared to $99,602 as at November 30,
  2006. Our net loss per share was (0.01) for the three months ended May 31, 2007.

We have accumulated expenses of $254,606 from February 14, 2006
(date of inception) to May 31, 2007 and incurred expenses of $198,911 for the
six months ended May 31, 2007. Our total expenses were $93,502 for the three
months ended May 31, 2007 compared to $12,932 for the same period in 2006.

Our accumulated expenses from February 14, 2006 (date of inception)
  to May 31, 2007 included $2,732 in depletion and depreciation and $254, 606
  in general and administrative expenses. Of our $2,732 accumulated depletion
  and depreciation expenses, $2,167 was accumulated during the six month ended
  May 31, 2007 including $1,303 during the three months ended May 31, 2007. Of
  our accumulated general and administrative expenses of $254,606, $196,744 was
  incurred during the six months ended May 31, 2007 including $92,199 during the
  three months ended May 31, 2007.

Our general and administrative expenses consist of professional
fees, management and consulting fees, bank charges, travel, meals and
entertainment, rent, foreign exchange, office maintenance, communication
expenses (cellular, internet, fax, and telephone), courier, postage costs and
office supplies. Our professional fees include legal, accounting and auditing
fess.

On February 15, 2006 we issued options to acquire 5,000,000
shares at $0.0001 per share to Gary Chayko, our President and Chief Executive
Officer; options to acquire 2,500,000 shares at $0.0001 per share to Jordan
Shapiro, our Chief Financial Officer; and options to acquire 2,500,000 shares at
$0.0001 per share to Hudson Capital, a company owned by Jordan Shapiro. The
options were issued as compensation for their services, and we do not intend to
issue more options to them in the next two years. The options vested
immediately, and are valid for a period of five years from the date of grant. We
believe that it is necessary to enter into option agreements in order to retain
the services of Mr. Chayko and Mr. Shapiro.

Plan of Operations

We have limited operations and are solely dependent on the
funds raised through our equity or debt financing. As of May 31, 2007, we had
$302,287 in our bank accounts.

4

---

For the next twelve months (beginning August 2007) we intend
to:

- Complete the purchase of additional non-operated interests in producing
  wells;
- Complete the purchase of exploration rights to a development stage oil and
  gas exploration project;
- Plan and carry out a full exploration program on a potential advanced
  stage oil and gas property; and
- Complete private and/or public financing to cover the cost of acquiring
  additional exploration projects and non-operated interests in existing leases.

Currently, we are reviewing additional non-performing leases in
Oklahoma and additional working interests in Oklahoma, Texas, Wyoming and
Canada.

We expect to require approximately $7,030,000 in financing to
continue our planned operation and exploration over the next year. Our planned
acquisition and exploration expenditures for oil and gas interests and
properties over the next twelve months (beginning August 2007) are summarized as
follows:

Description
      Potential 
        completion date
      Estimated 
        Expenses ($)Retain a full-time engineer, a full- time land specialist
      and a full-time geologist
    November 1, 2007
    400,000Purchase non-operated working interests in existing leases
    November 1, 2007
    3,000,000Acquire a development stage exploration project
    November 1, 2007
    1,100,000Develop and carry out a preliminary exploration program on
      an acquired property
    January 1, 2007  April 30, 2008
    2,000,000Total
    
    6,500,000


Our other planned operational expenses for the next twelve
months (beginning August 2007) are summarized as follows:

Description
      Potential 
        completion date
      Estimated 
        Expenses ($)Select and appoint a new Board member
    November 1, 2007
    10,000Retain a new President and CEO and CFO
    November 1, 2007
    250,000Raise additional private or public equity (legal,
      accounting and marketing fees)
    November 1, 2007
    100,000General and administrative expenses
    12 months
    77,000Professional fees (legal, accounting and auditing fees)
    12 months
    130,000


5

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Consulting and employee fees
      12 months
      220,000Marketing expenses
      12 months
      45,000Total
      
      832,000


The general and administrative expenses for the year will
consist primarily of transfer agent fees, management fees, investor relations
and general office expenses. The professional fees for the audit and legal work
are related to our regulatory filings throughout the year,

We had cash in the amount of $302,287 as of May 31, 2007. Based
on our planned expenditures, we require a minimum of approximately $7,030,000 (a
total of approximately $7,332,000 less our cash of $302,287) to proceed with our
business plan over the next twelve months. If we achieve less than the full
amount of financing that we require, we will not be able to carry out our full
business plan or we will be forced to proceed with scaled back business plans
based on our available financial resources.

For the following two years, we anticipate that we will incur
substantial losses. We do not have enough capital to carry out our business
plan. Even if we carry out exploration activities on the properties we plan to
acquire, this will not guarantee that the properties will contain commercially
exploitable quantities of oil and gas. Such exploration projects will be
directed by our management and will be supervised by Gary Chayko and Jordan
Shapiro, our President, CEO and CFO. If we retain a new President, CEO and CFO,
the new officer or officers will manage our operations and supervise our planned
exploration projects.

Due to our limited finances, there is no assurance that we will
be able to acquire an interest in a property that merits further exploration. If
we were to acquire an interest in a property, then our plan would be to conduct
resource exploration of the property. In any event, we anticipate that our
acquisition of a property and any exploration activities that we would undertake
will be subject to us achieving additional financing.

Even though we plan to raise capital by equity or debt
financing, we believe that debt financing may not be a viable alternative for
funding our operations as we do not have tangible assets to secure any debt
financing. We anticipate that additional funding will be in the form of equity
financing from the sale of our common stock. However, we do not have any
financing arranged and we cannot provide investors with any assurance that we
will be able to raise sufficient funds from the sale of our common stock to fund
our operation and exploration activities. In the absence of such financing, we
will not be able to purchase non-operated working interest in existing leases,
acquire a development stage exploration project, or carry out a preliminary
exploration program on an acquired property. Even if we are successful in
obtaining equity financing to fund our operation and exploration, there is no
assurance that we will obtain the funding necessary to pursue any advanced
exploration of our future properties following the completion of preliminary
exploration. If we do not continue to obtain additional financing, we will be
forced to abandon our properties, our plan of operation and our exploration.

Modifications to our plans will be based on many factors,
including: results of exploration, assessment of data, weather conditions,
exploration costs, the price of oil and gas and available capital. Further, the
extent, to which we carry out our exploration programs, is dependent upon the
amount of financing available to us.

We may consider entering into joint venture arrangements to
provide the required funding to pursue drilling and advanced exploration of our
potential properties. If we enter into a joint venture arrangement, we would
likely have to assign a percentage of our interest in our projects to the joint
venture partner. The assignment of the interest would be conditional upon
contribution by the joint venture partner of capital to enable the advanced
exploration on the properties to proceed. There is no assurance that any third
party would enter into a joint venture agreement with us in order to fund
exploration of our potential projects.

6

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Liquidity and Capital Resources

As of May 31, 2007 we had cash of $302,287 compared to $99,602
in cash at November 30, 2006. At May 31, 2007 we had a working capital surplus
of $406,261 compared to $312,259 at November 30, 2006. Our accumulated deficit
was ($255,592) as at May 31, 2007 compared to ($58,427) as at November 30, 2006.

Our net loss of ($255,592) from February 14, 2006 (date of inception)
  to May 31, 2007 was funded by our equity financing. During the six month ended
  May 31, 2007, we raised $276,500 in equity financing.

On August 1, 2006 we acquired a 2.34% non-operated interest in
three wells in Oklahoma and completed our obligation to make a cash payment of
$34,038. On November 29, 2006 we engaged Sedona AG, a Swiss company, to provide
investment and financial consulting services to us. We issued 6,000,000 common
shares as consideration pursuant to the consulting agreement. On July 24, 2006,
we entered into a consulting agreement with Cleveland Maynard Welsh to provide
us geological consulting services. We issued Mr. Welsh 10,000 common shares in
January 2007 pursuant to this agreement.. We paid him $2,500 per month as
consideration for his geological consulting services. On December 1, 2006 we
entered into an advisory board agreement with Mr. Welsh to replace the agreement
dated July 24, 2006. Under the new agreement, we committed to pay him $400 for
every actual day Mr. Welsh provides us geological services and issue him 10,000
common shares annually. On April 28, 2007 we issued 10,000 more common shares to
Mr. Welsh as his annual payment under this new agreement.

On July 24, 2007 we entered into a consulting agreement with
  Norman Meier whereby Mr. Meier’s will serve as our Vice President of Corporate
  Development. Pursuant to that agreement, we must compensate Mr. Meier in advance
  for 2 years of service by issuing to him 2,000,000 shares of our common stock
  at fair market value before December 31, 2007.

As of May 31, 2007, we have enough money in our bank accounts
to cover all of our required payments on our consulting agreements.

We did not use net cash for investing activities during the six
  months ended May 31, 2007. We used net cash of $73,815 in operating activities
  for the six months ended May 31, 2007. For the period from February 14, 2006
  (Date of Inception) to May 31, 2006, we used $8,850 in cash in operating activities.
  We received net cash of $276,500 from the issuance of our common stock during
  the six months ended May 31, 2007 compared to $113,800 during the period from
  February 13, 2006 (Date of Inception) to May 31, 2006.

Our monthly cash requirement during the six months ended May
  31, 2007 was approximately $14,300. As of May 31, 2007, we had cash of $302,287.

However, we anticipate that after August 2007 our monthly
expenses will increase to $611,000, which includes $32,000 monthly for general
and administrative expenses, $52,000 monthly for consulting and employee
expenses, $19,000 monthly for professional fees, $340,000 for acquisition of
non-operated working interests and an exploration project and $168,000 monthly
for exploration costs.

Of the $7,332,000 we need for the next 12 months, we had
$302,287 in cash as of May 31, 2007. We intend to raise the balance of our cash
requirements for the next 12 months (approximately $7,030,000) from private
placements, shareholder loans or possibly a registered public offering (either
self-underwritten or through a broker-dealer) within the next few months. If we
are unsuccessful in raising enough money through future capital raising efforts,
we may review other financing possibilities such as bank loans. At this time we
do not have any commitments from any broker-dealer to provide us with
financing.

There is no assurance that any financing will be available or
if available, on terms that will be acceptable to us. We also may need
additional financing to carry out our business plan.

7

---

Obtaining additional financing will be subject to a number of
factors including market conditions, investor acceptance of our business plan,
and investor sentiment. These factors may make the timing, amount, terms and
conditions of additional financing unattractive or unavailable to us. If we
cannot raise at least $7,030,000, we will have to significantly reduce our
spending, delay or cancel planned activities or substantially change our current
corporate structure. In such an event, we intend to implement expense reduction
plans in a timely manner. However, these actions would have material adverse
effects on our business, revenues, operating results, and prospects, resulting
in a possible failure of our business. We may need to obtain additional
financing which may not be available, which could cause us to cease operations.

Going Concern

We have not attained profitable operations and are dependent
upon obtaining financing to pursue any extensive exploration activities. For
these reasons our auditors stated in their report that they have substantial
doubt we will be able to continue as a going concern.

Future Financings

We will require additional financing of $7,030,000 in order to
proceed with our full business plan. We plan to conduct private placements or a
public offering in order to raise the funds necessary to pursue our plan of
operations. Issuances of additional shares will result in dilution to our
existing shareholders. We currently do not have any arrangements in place for
the completion of any private placement financings or a public offering and
there is no assurance that we will be successful in completing any equity
financings.

We are currently offering common shares for sale through
private placements pursuant to Regulation S of the Securities Act to non US
persons.

Off-Balance Sheet Arrangements

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

Critical Accounting Policies

Our financial statements are impacted by the accounting
policies used and the estimates and assumptions made by management during their
preparation. A complete summary of these policies is included in Note 2 of the
notes to our financial statements. We have identified below the accounting
policies that are of particular importance in the presentation of our financial
position, results of operations and cash flows and which require the application
of significant judgment by management.

Oil and Gas Properties

We utilize the full-cost method of accounting for petroleum and
natural gas properties. Under this method, we capitalize all costs associated
with acquisition, exploration and development of oil and natural gas reserves
into the full cost pool on a country by country basis. When we obtain proven oil
and gas reserves, capitalized costs will be depleted on the units-of-production
method using estimates of proved reserves. The costs of unproved properties are
not amortized until it is determined whether or not proved reserves can be
assigned to the properties. Until such determination is made we assess annually
whether impairment has occurred, and include in the amortization base drilling
exploratory dry holes associated with unproved properties.

8

---

We apply a ceiling test to the capitalized cost in the full
cost pool. The ceiling test limits such cost to the estimated present value,
using a ten percent discount rate, of the future net revenue from proved
reserves, based on current economic and operating conditions. Specifically, we
compute the ceiling test so that capitalized cost, less accumulated depletion
and related deferred income tax, do not exceed an amount (the ceiling) equal to
the sum of: (A) The present value of estimated future net revenue as of the date
of the latest balance sheet presented, less estimated future expenditures; plus
(B) the cost of property not being amortized; plus (C) the lower of cost or
estimated fair value of unproven properties included in the costs being
amortized; less (D) income tax effects related to differences between the book
and tax basis of the property.

For unproven properties, we exclude from capitalized costs
subject to depletion, all costs directly associated with the acquisition and
evaluation of the unproved property until it is determined whether or not proved
reserves can be assigned to the property. Until such a determination is made, we
assess the property at least annually to ascertain whether impairment has
occurred. In assessing impairment we consider factors such as historical
experience and other data such as primary lease terms of the property, average
holding periods of unproved property, and geographic and geologic data. We add
the amount of impairment assessed to the cost to be amortized subject to the
ceiling test.

Stock Based Compensation

In accordance with SFAS No. 123R Share Based Payments,
we account for share-based payments and stock options using the fair value
method. We have granted stock options to directors. All transactions in which
goods or services are the consideration received for the issuance of equity
instruments are accounted for based on the fair value of the consideration
received or the fair value of the equity instrument issued, whichever is more
reliably measurable. Equity instruments issued to employees and the cost of the
services received as consideration are measured and recognized based on the fair
value of the equity instruments issued.

Related Party Transactions

On February 15, 2006, we issued an aggregate of 10,000,000
options to our directors and Hudson Capital, a company owned by one of our
directors at an exercise price of $0.0001 per share for their services. The
expiration date of those options is February 15, 2011. Our directors and Hudson
Capital purchased a total of 30,000,000 common shares from us for a cash payment
of $5,000.

On November 29, 2006, we issued 6,000,000 shares of common
stock with a fair value of $225,000 Sedona AG as advance payment for its
investment consulting services to December 31, 2007.

Other than as described above, we have not entered into any
transactions with our officers, directors, persons nominated for these
positions, beneficial owners of 5% or more of our common stock, or family
members of these persons wherein the amount involved in the transaction or a
series of similar transactions exceeded the lesser of $120,000 or 1% of the
total assets for the last fiscal year.

Inflation

The effect of inflation on the Company's revenue and operating
results was not significant.

Audit Committee

The functions of the audit committee are currently carried out
by our Board of Directors. Our Board of Directors has determined that we do not
have an audit committee financial expert on our Board of Directors carrying out
the duties of the audit committee. Our Board of Directors has determined that
the cost of hiring a financial expert to act as a director of XTOL and to be a
member of the audit committee or otherwise

9

---

perform audit committee functions outweighs the benefits of
having a financial expert on the audit committee.

ITEM 3. CONTROL AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

As required by Rule 13a-15 under the Exchange Act, we carried
out an evaluation of the effectiveness of the design and operation of our
disclosure controls and procedures as of May 31, 2007, being the date of our
first quarter end covered by this Quarterly Report. This evaluation was carried
out under the supervision and with the participation of our Chief Executive
Officer and Chief Financial Officer. Upon that evaluation, our Chief Executive
Officer and Chief Financial Officer concluded that our disclosure controls and
procedures are effective in timely alerting management to material information
relating to us required to be included in our periodic SEC filings.

Disclosure controls and procedures are controls and other
procedures that are designed to ensure that information required to be disclosed
in our reports filed or submitted under the Exchange Act is recorded, processed,
summarized and reported, within the time periods specified in the Securities and
Exchange Commission's rules and forms.

During our quarter ended May 31, 2007, there were no changes in
our internal control over financial reporting that have materially affected, or
are reasonably likely to affect, our internal control over financial reporting.

The term "internal control over financial reporting" is defined
as a process designed by, or under the supervision of, the registrant's
principal executive and principal financial officers, or persons performing
similar functions, and effected by the registrant's board of directors,
management and other personnel, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with generally accepted accounting
principles and includes those policies and procedures that:

|(1) | Pertain to the maintenance of records that in reasonable
      detail accurately and fairly reflect the transactions and dispositions of
      the assets of the registrant;                                                                                                                                                                                                   
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                
|(2) | Provide reasonable assurance that transactions are
      recorded as necessary to permit preparation of financial statements in
      accordance with generally accepted accounting principles, and that
      receipts and expenditures of the registrant are being made only in
      accordance with authorizations of management and directors of the
      registrant; and
|    |                                                                                                                                                                                                                                                                                                                                                                                
|(3) | Provide reasonable assurance regarding prevention or
      timely detection of unauthorized acquisition, use or disposition of the
      registrant's assets that could have a material effect on the financial
      statements.                                                                                                                                              

PART II  OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We are not aware of any pending or threatened legal proceedings
which involve XTOL or any of its properties or subsidiaries.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES

From December 1, 2006 to May 31, 2007, we completed the
following sales of unregistered securities:

10

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| | a) | On December 13, 2006, we issued 40,000 shares of common
      stock at a price of $0.25 per share for proceeds of $10,000.                                                                                                                                                                                                                                             
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                        
| | b) | On January 12, 2007, we issued 10,000 shares of common
      stock at a fair value of $2,500 to a consultant for services rendered.
      This amount was recorded as common stock subscribed as at November 30,
      2006.                                                                                                                                           
| |    |                                                                                                                                                                                                                                                                                                                                                                        
| | c) | On February 2, 2007, we issued 30,000 shares of common
      stock at a price of $0.50 per share for proceeds of $15,000. In connection
      with this private placement we paid a commission of $1,500 and issued
      1,500 common share purchase warrants at a fair value of $248 exercisable
      at $0.50 per share of common stock until February 7, 2008.    
| |    |                                                                                                                                                                                                                                                                                                                                                                        
| | d) | On April 18, 2007, we issued 10,000 shares of common
      stock at a fair value of $5,000 pursuant to an Advisory Board Agreement
      described in Note 9(a).                                                                                                                                                                                                       
| |    |                                                                                                                                                                                                                                                                                                                                                                        
| | e) | On May 16, 2007, we issued 100,000 shares of common
        stock at a price of $0.45 per share for net proceeds of $45,000.                                                                                                                                                                                                                                           
| |    |                                                                                                                                                                                                                                                                                                                                                                        
| | f) | As at May 31, 2007, we had received share subscriptions
        of $100,000 for 222,000 units at approximately $0.45 per unit. Each unit
        consists of one share of common stock and one-tenth of a share purchase
        warrant. One whole share purchase warrant is exercisable into one share
        of common stock at $0.50 per share until June 4, 2009.
| |    |                                                                                                                                                                                                                                                                                                                                                                        
| | g) | As at May 31, 2007, we had received share subscriptions
        of $108,000 for 240,000 units at approximately $0.45 per unit. Each unit
        consists of one share of common stock and one-tenth of a share purchase
        warrant. One whole share purchase warrant is exercisable into one share
        of common stock at $0.50 per share until June 4, 2009.

We completed the offerings of the common stock pursuant to Rule
903 of Regulation S of the Securities Act on the basis that the sale of the
common stock was completed in an "offshore transaction", as defined in Rule
902(h) of Regulation S. We did not engage in any directed selling efforts, as
defined in Regulation S, in the United States in connection with the sale of the
units. Each investor was not a US person, as defined in Regulation S, and was
not acquiring the shares for the account or benefit of a US person.

Each investor was given adequate access to sufficient
information about us to make an informed investment decision. None of the
securities were sold through an underwriter and accordingly, there were no
underwriting discounts or commissions involved. No registration rights were
granted to any of the purchasers.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4. SUBMISSION OF MATTERS TO A VOTE SECURITY
HOLDERS

None

ITEM 5. OTHER INFORMATION:

None

ITEM 6. EXHIBITS

|Exhibit | Exhibit    
|------- | -----------
|Number  | Description

|3.1  | Certificate (Articles) of Incorporation as filed with the
      Nevada Secretary of State on February 14, 2006 (1)
|---- | ------------------------------------------------------------------------------------------------------------------
|     |                                                                                                                   
|3.2  | Bylaws (1)                                                                                                        
|     |                                                                                                                   
|10.1 | Oklahoma Non-operated Interest Conveyance and Bill of
      Sale (1)                                              

11

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|10.2 | Cleveland Maynard Welsh Consulting Agreement
(1)                                                                                                                 
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |                                                                                                                                                                  
|10.3 | Sedona AG Consulting Agreement (1)                                                                                                                               
|     |                                                                                                                                                                  
|10.4 | Gary Chayko Option Agreement (1)                                                                                                                                 
|     |                                                                                                                                                                  
|10.5 | Hudson Capital Corporation Option Agreement (1)                                                                                                                  
|     |                                                                                                                                                                  
|10.6 | Jordan Shapiro Option Agreement (1)                                                                                                                              
|     |                                                                                                                                                                  
|10.7 | Advisory Board Agreement with Cleveland Maynard Welsh
      (1)                                                                                                  
|     |                                                                                                                                                                  
|31.1 | Certification of Chief Executive
        Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                       
|     |                                                                                                                                                                  
|31.2 | Certification of Chief Financial
        Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                       
|     |                                                                                                                                                                  
|32.1 | Certification of Chief Executive
        Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
        906 of the Sarbanes-Oxley Act of 2002
|     |                                                                                                                                                                  
|32.2 | Certification of Chief Financial
        Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
        906 of the Sarbanes-Oxley Act of 2002

|(1) | Included as exhibits on our Form SB-2 filed April 16,
      2007.
|--- | -----------------------------------------------------------------

SIGNATURES

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

|                    | XTOL Energy Inc.                            
|------------------- | --------------------------------------------
|                    | (Registrant)                                
|                    |                                             
|                    | /s/ Gary Chayko                             
|Date: July 30, 2007 | Gary Chayko                                 
|                    | Director, President, Chief Executive Officer
|                    |                                             
|                    | /s/ Jordan Shapiro                          
|Date: July 30, 2007 | Jordan Shapiro                              
|                    | Director, Chief Financial Officer, Principal
|                    | Accounting Officer, Secretary, Treasurer    

12

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