SECURITIES AND EXCHANGE
COMMISSIONWashington, D.C. 20549

FORM 10-KSB

| |  | Annual
report under Section 13 or 15(d) of the Securities Exchange Act of 1934 for the fiscal
year ended December 31, 2006.
| |  | ---------------------------------------------------------------------------------------------------------------------------

| |  | Transition
report under Section 13 or 15(d) of the Securities Exchange Act of 1934 for the
transition period from_________  to ________.
| |  | ----------------------------------------------------------------------------------------------------------------------------------------

Commission file number: 000-29323

|                                                                      | Star Energy Corporation
(Name of small business issuer as specified in its charter)              |                                                
|--------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------ | -----------------------------------------------
|Nevada
(State or other jurisdiction of
incorporation or organization) |                                                                                                  | 87-0643634
(IRS Employer
Identification Number)
|                                                                      | 317 Madison Avenue, New York, New York 10017
(Address of Principal Executive Offices) (Zip Code) |                                                

Issuers Telephone Number:
(212) 500-5006

Securities registered under Section
12(b) of the Exchange Act: None

Securities registered under Section
12(g) of the Exchange Act:

Common Stock ($0.001
Par Value)Title of Class

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

Check if there is no disclosure of
delinquent filers in response to Item 405 of Regulation S-B contained in this form, and if
no disclosure will be contained, to the best of registrants knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB .

Indicate by check mark whether the
registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes 
   No

The issuers revenues for the
fiscal year ended December 31, 2006, were $32,923.

The aggregate market value of the
issuers common stock, $0.001 par value (the only class of voting stock), held by
non-affiliates as of June 15, 2007 was approximately $75,886,500based on the
average closing bid and asked prices for the issuers common stock on May 31,
2007.

At June 15, 2007, the number of
shares outstanding of the issuers common stock, $0.001 par value (the only class of
voting stock), was 29,007,500shares.

Transition Small Business Disclosure
Format.  Yes     No



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# TABLE OF CONTENTS

|           |                                                                                      | Page
|---------- | ------------------------------------------------------------------------------------ | ----
|PARTI      |                                                                                      |     
|Item 1.    | Description of business                                                              | 3   
|Item 2.    | Description of property                                                              | 9   
|Item 3.    | Legal proceedings                                                                    | 9   
|Item 4.    | Submission of matters to a vote of security holders                                  | 9   
|PART II   
|Item 5.    | Market for common equity and related stockholder matters                             | 9   
|Item 6.    | Management's discussion and analysis or plan of operation                            | 11  
|Item 7.    | Financial statements                                                                 | 15  
|Item 8.    | Changes in and disagreements with accountants on accounting and financial disclosure | 33  
|Item 8a.   | Controls and procedures                                                              | 33  
|Item 8b.   | Other information                                                                    | 33  
|PART III  
|Item 9.    | Directors, executive officers, promoters and control persons;                        |     
|           | compliance with section 16(a) of the Exchange Act                                    | 36  
|Item 10.   | Executive compensation                                                               | 37  
|Item 11.   | Security ownership of certain beneficial owners and management                       | 40  
|Item 12.   | Certain relationships and related transactions                                       | 40  
|Item 13.   | Exhibits                                                                             | 41  
|Item 14.   | Principal accountant fees and services                                               | 43  
|SIGNATURES |                                                                                     



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# PART I

|ITEM 1. |  | DESCRIPTION
OF BUSINESS
|------- |  | -----------------------

# History

# 

We were incorporated in Nevada on
December 7, 1999, as "Cairo Acquisitions,  Inc." to engage in any legal undertaking.  On
November 21, 2002,  we  changed  our name to "Star  Energy  Corporation"  to reflect  the
 decision  of our  management  to enter into  exploration, development and production of
oil and gas resources.

Unless the context  otherwise
 requires,  references to "Star," "we," "us," and "our company" refer to Star Energy
 Corporation and its subsidiaries at the applicable time.

# Business History

From November 21, 2002 until October
6, 2006, we were engaged,  as an  independent  oil and natural gas producer,  in the
 exploration, development,  production  and sale of gas derived from five oil and gas
wells,  known as the "Galvan Ranch Gas Wells,"  located in Webb County,  West Texas,
 Texas,  in each of which we had a 15% working  interest  and a 12% net revenue
 interest.  The wells were on five separate  parcels of land spread over 425 acres of the
Galvan Ranch.  On October 6, 2006,  we  transferred  our entire  interest in the Galvan
Ranch Gas Wells to Ruairidh  Campbell,  who at that time was one of our officers and
 directors,  pursuant to an Assignment  and Bill of Sale. In  consideration  therefor,
 Mr. Campbell  transferred to us, for cancellation and return to our authorized but
unissued common  shares,  the  3,250,000  shares of our common stock held by him. As a
result,  since October 6, 2006, we no longer have had any interest in the Galvan Ranch
Gas Wells and are no longer engaged in the oil and gas business in Texas.

Pursuant to a Stock Purchase
 Agreement,  on October 6, 2006, we acquired 100% of the capital stock of Volga-Neft
 Limited Company,  a Russian limited  liability  company  primarily  engaged in the
processing and sale of crude oil in Samara,  Russia  ("Volga-Neft"),  in consideration
 for our  issuance  to the  stockholders  of  Volga-Neft  of an  aggregate  of
 10,000,000  shares of our  common  stock, representing  at the time  25.6% of our issued
 and  outstanding  shares.  Thereafter  we  advanced  $3,000,000  of working  capital to
Volga-Neft.  Volga-Neft  (i) sells to local oil  exporters,  wholesalers,  and
 distributors  crude oil it has purchased from local oil developers and (ii) processes
 crude oil purchased from local oil  developers,  selling the processed  petroleum
 products in the local market  to oil  exporters,  wholesalers,  and  distributors.  As a
result  of this  acquisition,  Volga-Neft  became  our  wholly-owned subsidiary.

In April 2007, we were advised that
the financial  statements of Volga-Neft  purportedly audited by RSM Top-Audit in Russia
for periods prior to our  acquisition  of  Volga-Neft,  that we filed with the
 Securities  and Exchange  Commission on a Form 8-K/A on December 8, 2006,  should no
longer be relied upon  because the  individuals  who  purportedly  performed  the audit
were not the  auditing  firm's representatives.  These  financial  statements  pertain to
the audited  balance sheets of Volga-Neft as of October 6, 2006 and December 31 2005, and
the related statements of income,  stockholders'  equity and cash flows for the period
January 1,  2006 through October 6, 2006 and the year ended December 31, 2005.  We filed
a Current Report on Form 8-K to disclose these developments on May 11, 2007.



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-4-

Together  with our audit  committee,
 we are carefully  examining  the events  leading to the auditing  firm's  determination
 that the financial  statements of Volga-Neft  included in our December 8, 2006 Form
8-K/A could not be relied upon and whether the management of Volga-Neft  acted
 complicitly  with those who prepared the audit. We have engaged special  investigative
 counsel with respect to this matter.  We are continuing our  investigation  and intend
to provide updated  disclosure  through a Current Report on Form 8-K when the
investigation is completed.

By a Rescission  Agreement of Stock
 Purchase  Agreement  dated June 14, 2007 among us,  Volga-Neft  and the  individuals
 from whom we acquired the shares of  Volga-Neft,  the Stock Purchase  Agreement was
 rescinded,  we returned the shares of Volga-Neft we received to the former  stockholders
 who, in turn,  returned to us the  10,000,000  shares of our common stock that we had
previously  issued.  In addition,  Volga-Neft  issued a $4,200,000  promissory note in
our favor which we, in turn,  sold to an  unaffiliated  third party on a non-recourse
basis for $3,000,000.

On  November  6,  2006,  we entered
 into a Letter of Intent to acquire  100% of the common  stock of  Samaratransoil  Ltd.,
 a company organized under the laws of the Russian  Federation,  from its sole
 stockholder in exchange for 1,000,000  shares of our common stock. The  consummation of
this transaction was subject to certain  conditions,  including  completion of due
diligence to our  satisfaction. After performing our due diligence, we determined not to
proceed further with the transaction.

On November 28, 2006, we entered
into a Stock Purchase  Agreement to acquire 51% of the capital stock of  Kommunarskoe
 NGDU, a Russian limited  liability  company,  from its sole  stockholder in exchange for
6,000,000 shares of our common stock. The consummation of this transaction was subject to
certain  conditions,  including  completion of due diligence to our  satisfaction.  After
performing our due diligence as part of satisfying the closing conditions,  we determined
not to proceed further with the transaction.  Effective June 14, 2007, all parties to
this Stock Purchase Agreement agreed not to proceed with the transaction and to end all
further negotiations.

# Our Current Business
Plans

We are not  currently  engaged  in
an  active  business.  Our  goal is to be  engaged  in the  acquisition,  exploration,
 development, production in, and sale of oil derived from resources in, the Commonwealth
of Independent States.

In this regard,  on March 12,  2007,
we entered into a memorandum of  understanding  to acquire  Anglo-Ukra  Energy, a
Ukranian holding company.  Anglo-Ukra  Energy is a special purpose  Ukrainian  holding
entity for the  acquisition and development of certain  Ukrainian energy  projects.  The
 memorandum  of  understanding  provides us with the right to  concessions  over three
oil and gas fields in the Ukraine  (Region,  Sakhalinska  and  Bukovyna).  The three
fields subject to the  memorandum of  understanding  are believed to contain total
reserves of over  150 million  barrels of oil and 75 billion cubic feet of natural gas.
In connection  with the  transaction,  we are to issue,  at the closing of the
 transactions  under a definitive  agreement to be negotiated  and executed,  1,500,000
 shares of common stock,  subject to adjustment  based upon the prevailing  price of our
common stock at the closing of the transaction  (which is anticipated  in early July
2007).  As part of our  anticipated  expansion of our efforts in the  Ukraine,  we plan
to open and staff an office in Kiev.

The closing of the  transaction is
subject to, among other things,  the execution of a definitive  agreement,  approval by
our Board of Directors,  completion of due diligence,  and receipt of



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- 5 -

required governmental and third
party approvals.  In addition,  the closing of this  transaction will be conditioned
 upon the execution by a third party of a release  relinquishing  all rights over certain
oil and gas fields with  producing and proven  reserves  which  Anglo-Ukra  Energy has an
option to acquire.  There can be no assurance that we will complete the transactions
contemplated by the memorandum.

# Debenture Financing

On February 9, 2007, we entered into
a Securities Purchase Agreement (the "Securities  Purchase  Agreement")  pursuant to
which we sold $7,500,000  principal  amount of our 8% Secured  Convertible  Debentures
 (the  "Debentures")  to  institutional  investors for a total purchase price of
$7,500,000 (the "Debenture  Financing").  Pursuant to the terms of the Securities
Purchase Agreement,  we also issued to the  investors at closing,  on February  12,
 2007,  warrants to purchase,  until  February 12, 2012,  including  through a cashless
exercise  feature,  an aggregate of 2,437,500  shares of our common stock at an initial
 exercise price of $3.81 per share,  subject to adjustment for certain issuances,
transactions and events resulting in dilution or potential dilution to the holders.

The unpaid  principal  amount of the
Debentures,  together with accrued but unpaid  interest and any other amounts due
thereon,  is due and payable on February 11, 2010, or earlier upon acceleration following
an event of default, as defined in the Debentures.

The  rescission  of the  acquisition
 of Volga-Neft  may result in the  acceleration  of the maturity of some or all of the
 $7,500,000 principal  amount of 8% Secured  Convertible  Debentures  we issued in
February  2007 and that  otherwise  would be due on February 11, 2010, or earlier upon
 acceleration  following an event of default,  as defined in the  Debentures.  See
 "Management's  Discussion and Analysis - Liquidity and Capital Resources" in Item 6
below.

The principal  amount of the
Debentures and accrued  interest thereon is convertible into shares of our common stock
at the election of the investors at an initial  exercise price of $2.00 per share,
 subject to adjustment for certain  issuances,  transactions  or events that would
 result in dilution or  potential  dilution  to the  holders.  The right of each
 investor  to convert  the  Debentures,  or exercise the Warrants,  is subject to the
 restriction  that such  conversion or exercise does not result in the investor
 beneficially owning at any one time more that 4.99% of our outstanding shares of common
stock.

Payment of the  Debentures  is
 guaranteed  by  Volga-Neft  pursuant  to the terms of a  Guarantee  dated as of February
9, 2007 and is secured by all of our assets and the assets of Volga-Neft  pursuant to the
terms of a Security  Agreement dated as of February 9, 2007. Consequently, we anticipate
having to renegotiate the security interests of the Debentureholders.

Pursuant to the terms of a
Registration  Rights Agreement by and between us and the purchasers of the Debentures,
 dated as of February 9, 2007, we agreed to prepare and file by April 15,  2007 with the
Securities and Exchange Commission a registration  statement on Form SB-2 for the purpose
of  registering  for resale all of the shares of our common stock  issuable upon
 conversion of the Debentures and the exercise of the Warrants.  We have not, to date,
 filed the Registration  Statement.  The  Registration  Rights Agreement  provides that,
if we did not file the  Registration  Statement by April 15,  2007, the Registration
 Statement is not declared  effective by the Securities and Exchange Commission by July
15,  2007, and in certain other circumstances  (including if the Registration Statement
does not remain  continuously  effective  except for certain limited periods for
specified  reasons),  we are to pay, on the applicable date and each monthly anniversary
of that



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-6-

date, as partial liquidated
 damages,  1.5% of the principal amount of the Debentures then held by the
 Debentureholders.  If we fail to pay any of these  amounts  within  seven days after the
date  payable,  the  Registration  Rights Agreement provides that we are to pay interest
thereon at the rate of 18% per annum.

As a condition  of the  Debenture
 Financing,  we have entered into  agreements  with each of our  officers,  directors
 and  principal stockholders  pursuant to which each of them has agreed not to sell any
shares of our common  stock  prior to 90 calendar  days after a registration  statement
 covering the resale all of the shares of our common stock  issuable upon  conversion of
the Debentures and the exercise of the Warrants has been declared effective.

We paid Rodman & Renshaw LLC,
 placement  agent for the Debenture  Financing,  $525,000 (7% of the gross  proceeds from
the sale of the Debentures),  plus $25,000 in reimbursement of its expenses,  under a
Placement Agency Agreement dated February 9, 2007. We also issued to Rodman & Renshaw
LLC and its  designees  warrants to purchase,  until  February 12, 2012, 262,500  shares of our
common stock at an exercise price of $3.81 per share,  subject to adjustment  for certain
 issuances,  transactions  and events  resulting in dilution or potential dilution to the
holders.  We also have agreed to indemnify  Rodman & Renshaw LLC,  its selected  dealers,
 agents and their  respective officers,  directors,  employees and controlling persons
against liabilities  incurred under the Securities Act, as well as claims made against
those persons for finder's or broker's  fees,  and to reimburse  those persons for
expenses  (including  reasonable  attorneys' fees) incurred in  investigating  and
defending  against  claims  asserted  against them, in connection  with the offer and
sale of the Debentures,  except in certain  circumstances,  and to the extent
 indemnification is not available,  to contribute to payments made by those persons.

# Competition

The oil and gas  exploration
 industry is highly  competitive.  We encounter  competition in all aspects of our
 operations,  including property  acquisition,  and for equipment  and labor  required to
operate and to develop  properties  and  operations.  We compete with major oil
companies,  independent oil companies,  and individual  producers and operators.  Many
 competitors  have financial and other resources substantially greater than ours.

In  addition,  the oil  industry as
a whole also  competes  with other  industries  in supplying  the energy and fuel
 requirements  of industrial,  commercial and individual  consumers.  The price and
availability of alternative energy sources could adversely affect our revenue.

# Governmental Regulation

Our  operations  will be subject to
various  levels of  government  controls and  regulations  in virtually all of the
countries in the Commonwealth of Independent States,  including environmental controls
and regulations,  that will vary from country to country and from time to time as they
are reviewed for amendment or expansion.

We will  attempt to comply  with all
legal  requirements  in the  conduct of our  operations  and employ  business  practices
 which we consider to be prudent under the  circumstances  in which we operate.  Failure
to comply with such rules and  regulations can result in substantial  penalties.  The
 regulatory  burden on the oil and gas  industry  increases  our cost of doing  business
 and  affects our profitability.  Because such rules and regulations are frequently
 amended or  reinterpreted,  we are unable to predict the future cost or impact of
complying with such laws.



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- 7 -

# Environmental Regulation

Oil exploration,  storage,
 transportation,  refining,  and related activities are subject to numerous and
constantly changing country, state and local laws governing the discharge of materials
 into the  environment or otherwise  relating to  environmental  protection. These laws
and regulations  may require the  acquisition of certain permits prior to or in
connection with our operations,  restrict or prohibit  the types,  quantities  and
 concentration  of  substances  that we can release  into the  environment,  restrict or
prohibit activities that could impact endangered or threatened  species,  protected areas
or natural resources,  require some degree of remedial action to mitigate pollution from
former operations and impose substantial liabilities for pollution resulting from our
operations.

For example,  the government of the
Russian  Federation,  Ministry of Natural  Resources,  and other agencies  establish
special rules, restrictions  and  standards  for  enterprises  conducting  activities
 affecting  the  environment.  The general  principle of Russian environmental  law is
that any  environmental  damage must be fully  compensated.  Under  certain
 circumstances,  top  officers of the entity causing  substantial  environmental  damage
may be subject to criminal  liability.  The law of the Russian Federation on subsoil
requires that all users of subsoil  ensure  safety of works related to the use of subsoil
and comply with existing  rules and standards of environment protection.

Environmental  laws and regulations
may substantially  increase the cost of our operations and may prevent or delay the
commencement or continuation of a given project and thus generally could have a material
 adverse effect upon our capital  expenditures,  earnings,  or competitive  position.
  Violation of these laws and  regulations  could result in  significant  fines or
penalties.  We may experience accidental  spills,  leaks and other  discharges of
contaminants at some of the properties that we may acquire,  operate or sell, or in which
we may hold an interest but not operational  control, as have other similarly situated
oil and gas companies,  and including past or ongoing  contamination  for which we may be
held responsible.  The costs of remedying such conditions may be significant,  and could
have a material adverse impact on our financial condition and results of operations.

Changes in existing  environmental
 laws and  regulations  or in the  interpretations  thereof could have a  significant
 impact on our operations,  as well as the oil and gas industry in general.  For
instance,  any changes in  environmental  laws and  regulations  that result in more
 stringent  and costly waste  handling,  storage,  transport,  disposal or clean-up
 requirements  could have a material adverse impact on our results of operations.

# Patents, Trademarks,
Licenses, Franchises, Concessions, Royalty Agreements and Labor Contracts

# We have no patents,
trademarks, licenses, franchises, concessions, royalty agreements or labor contracts.

# Employees

Our corporate  headquarters  are in
New York, New York. We have two full-time  employees at our corporate  headquarters  in
addition to our three executive  officers.  All of our executive  officers are employed
by us full-time,  with the exception of our Chief Financial Officer, who devotes
approximately twenty hours per week to this role.



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- 8 -

From November 21, 2002 until
 October 6, 2006, as an  independent  oil and natural gas producer,  we were involved in
the  exploration, development,  production and sale of gas derived from  properties
 located in Webb County,  West Texas.  We realized  production from a total of five oil
and gas wells known as the "Galvan Ranch Gas Wells"  located on five  separate  parcels
of land spread over 425 acres of the Galvan Ranch.  Depth of the producing  intervals
 varied from 5,800 to 6,800 ft within the Olmos sand  reservoir.  The producing interval
within the Olmos sand reservoir where Star's wells were located had an average  thickness
 ranging from 75 to 100 feet with an average porosity ranging from 10% to 14%.

With respect to each well, our
working interest,  which was defined as an interest in oil and gas and included
 responsibility  for all drilling,  developing,  and operating  costs,  was 15%. Our net
revenue  interest,  which was defined as that portion of gas production revenue after
deduction of royalties, was 12%.

The wells are identified as detailed
below:

|Well Name          | Working Interest | Net Revenue Interest
|------------------ | ---------------- | --------------------
|Ed Rachal "GC" #1A | 15               | 12                  
|Ed Rachal "GC" #2  | 15               | 12                  
|Ed Rachal "GC" #3A | 15               | 12                  
|Ed Rachal #2       | 15               | 12                  
|Ed Rachal #6       | 15               | 12                  

We preferred operating in Texas due
to the relatively inexpensive drilling and completion operations and the absence of
poisonous gas often associated with oil and gas production. Recovery from producing wells
was consistently evaluated, and cost-efficient work-over methods were often considered to
improve the performance of the wells.

Our interests in our wells were
maintained and operated by Lewis Petro Properties, Inc. (Lewis), a local
operator, under the terms of an Operating Agreement. Lewis maintained a varying interest
in each of our wells. The terms of the Operating Agreement granted to Lewis the exclusive
right to conduct operations with respect to our interests in our wells in exchange for a
monthly operating fee for each well and any other costs incurred in normal operation of
the wells. Title to all machinery, equipment or other property attached to the wells under
the Operating Agreement, as amended, belonged to each party in proportion to its interest
in each well, as did any amount recovered as the result of salvaging machinery or
equipment from the wells. Under the Operating Agreement, Lewis was permitted to make
capital expenditures without notifying us of the expense up to $25,000. Amounts that were
to be spent over that amount required that notice be provided by Lewis to us. Should we
have wished to drill an additional well on the property under lease, we would have been
required to provide notice to all owners of the lease of our intent to drill and of the
exercise of our option to participate in new drilling. Should other owners have chosen not
to participate in the drilling costs, we would have been entitled to recoup 300% of the
cost incurred in drilling the well from production before reverting to our minority
interest on the lease. Abandonment of wells was required to have been approved by the
party holding a majority interest in the specific well to be abandoned.

Prior to drilling new wells, a
geological review of the prospective area would have been made by us in cooperation with
Lewis to determine the potential for additional gas reserves. Our consultants would then
have reviewed available geophysical data (generally seismic and gravity data) to further
evaluate the area. After the evaluation of the geophysical data, if the target would have
appeared to have contained significant accumulations of gas, we would have considered the

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- 9 -

economic  feasibility  of drilling
the target.  Significant  accumulations of gas would not have guaranteed  economic
 recovery because it would have depended on many factors such as how much it costs to
drill and complete wells in a certain area, how close the wells are to pipelines and
pipeline pressure, what the price of oil or gas is, how accessible the area is, whether
the project is a developmental or wildcat prospect.

On March 24, 2006, we executed a
letter of intent to acquire Terrabyte, LLC (Terrabyte), an oil and gas
exploration company headquartered in Allegan, Michigan. Terrabyte was positioned to
initiate an enhanced secondary recovery water flood development to produce oil from the
Mohican River field located in the vicinity of the Perry Township, Ashland County, Ohio.
Subsequent to the three month period ended June 30, 2006, we announced that the parties
had not been able to reach a mutually acceptable definitive agreement, terminated the
letter of intent, and ended all further negotiations.

On October 6, 2006, we entered into
an Assignment and Bill of Sale with Ruairidh Campbell, who was at that time our officer
and director. Pursuant to such assignment, we assigned to Mr. Campbell all of our
interests in and to the five Galvan Ranch Gas Wells. As consideration, Mr. Campbell
transferred to us 3,250,000 shares of our common stock held by him for cancellation and
return to our authorized but unissued common shares. As of October 6, 2006, we no longer
have any interest in the Galvan Ranch Gas Wells and are no longer engaged in the oil and
gas business in Texas.

|ITEM 2 |  | DESCRIPTION
OF PROPERTY
|------ |  | -----------------------

We lease our executive offices, which
consist of approximately 1,000 square feet, at 317 Madison Avenue, New York, New York
10017, under a sub-lease for $3,000 per month on a month to month basis. Star believes
that its current office space will be adequate for the foreseeable future.

|ITEM 3 |  | LEGAL
PROCEEDINGS
|------ |  | -----------------

Neither we nor any of our property is
the subject of any pending legal proceedings.

|ITEM 4 |  | SUBMISSION
OF MATTERS TO A VOTE OF SECURITY HOLDERS
|------ |  | ---------------------------------------------------

No matter was submitted to a vote of
the security holders, through the solicitation of proxies or otherwise, during the fourth
quarter ended December 31, 2006.

# PART II

|ITEM 5 |  | MARKET
FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND SMALL BUSINESS ISSUER PURCHASES OF
EQUITY SECURITIES
|------ |  | -----------------------------------------------------------------------------------------------------------------

Shares of our common stock are traded
on the Over the Counter Bulletin Board under the symbol SERG.OB. The table
below sets forth the high and low bid prices for our common stock for each quarterly
period since December 21, 2005, when our common stock was first quoted on the Over the
Counter Bulletin Board. Our common stock was forward split at the rate of five for one on
December 31, 2005, and the information provided in the table below has been adjusted to
give retroactive effect to the stock split. The quotations below reflect inter-dealer
prices, without retail mark-up, mark-down or commission and may not represent actual
transactions:

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- 10 -

|     |  |               | 
|---- |  | ------------- | 
|Year |  | Quarter Ended | 
|     |  |               | 
|2006 |  | December 31   | 
|     |  | September 30  | 
|     |  | June 30       | 
|     |  | March 31      | 
|2005 |  | December 31   | 

# Record Holders

As of June 15, 2007, there were
approximately 79 shareholders of record, exclusive of stockholders whose shares were held
by brokerage firms, depositories and other institutional firms in street name
for their customers.

# Dividends

We have not declared any dividends
since inception and do not anticipate paying any dividends in the foreseeable future. The
payment of dividends is within the discretion of our board of directors and will depend on
our earnings, capital requirements, financial condition, and other relevant factors.
Pursuant to an agreement to which we are a party, we have agreed, among other things, not
to declare or pay out any dividend or make any distribution without the prior written
consent of the other party thereto (which consent is not to be unreasonably withheld).

# Recent Sales of
Unregistered Securities

On November 8, 2006, in consideration for services rendered to us, we issued 100,000
and 25,000 shares of our common stock to Marcus Segal, our present Chief Financial Officer
and a director and former President and Chief Executive Officer, and to F. Bryson Farrill,
a director of our company, respectively. In connection with his entering into an
Employment Agreement with us on November 16, 2006, we issued 300,000 shares of our common
stock to Patrick J. Kealy, our Chief Executive Officer. We believe that the issuance of
the shares was exempt from the registration provisions of the Securities Act by virtue of
the exemption afforded under Section 4(2) of the Securities Act.

# Purchases of equity
securities by the issuer and affiliated purchasers

On October 6, 2006, we purchased
3,250,000 shares of our common stock from Ruairidh Campbell, who at that time was one of
our officers and directors. The repurchase was made pursuant to an Assignment and Bill of
Sale, dated October 6, 2006, between us and Mr. Campbell. Pursuant to the assignment, we
assigned to Mr. Campbell all of our interests in and to our five Galvan Ranch Gas Wells.
See Item 1 above for information concerning the Galvan Ranch Wells.

---

- 11 -

|ITEM 6 |  | MANAGEMENTS
DISCUSSION AND ANALYSIS
|------ |  | ------------------------------------

The following discussion should be
read in conjunction with our financial statements and notes thereto included in this
report.

# FORWARD LOOKING
STATEMENTS

This Managements Discussion and Analysis
of Financial Condition and Results of Operations and other parts of this report contain
forward-looking statements that involve risks and uncertainties. Forward-looking
statements can be identified by words such as may, should,
anticipates, intends, expects, believes,
plans, predicts, estimates, strategy and
similar terms. Forward-looking statements are not guarantees of future performance and our
actual results may differ significantly from the results discussed in the forward-looking
statements. These statements are subject to risks and uncertainties and are based upon
assumptions and beliefs that may or may not materialize. These risks and uncertainties
include, but are not limited to, the following, many of which are beyond our control: the
sufficiency of existing capital resources; our ability to raise additional capital to fund
cash requirements for future operations; our ability to obtain and maintain sufficient
energy reserves to fund and maintain operations; the market for any oil and gas production
we may generate; domestic and foreign political conditions; the overall level of supply of
and demand for oil and gas; the price of imports of oil and gas; weather conditions; the
price and availability of alternative fuels; the proximity and capacity of oil pipelines
and other transportation facilities; uncertainties related to our future business
prospects, including with possible future acquisitions; the volatility of the stock market
in general and our common stock specifically; our ability to maintain the quotation of our
common stock on the Over the Counter Bulletin Board; and general economic conditions.

We also wish to advise readers not to
place any undue reliance on the forward looking statements contained in this report, which
reflect our beliefs and expectations only as of the date of this report. We assume no
obligation to update or revise these forward looking statements to reflect new events or
circumstances or any changes in our beliefs or expectations, other than as required by
law.

# OVERVIEW

From November 21, 2002 until October
6, 2006, we were engaged, as an independent oil and natural gas producer, in the
exploration, development, production and sale of gas derived from five oil and gas wells,
known as the Galvan Ranch Gas Wells, located in Webb County, West Texas,
Texas, in each of which we had a 15% working interest and a 12% net revenue interest. The
wells were on five separate parcels of land spread over 425 acres of the Galvan Ranch.

On October 6, 2006, we transferred
our entire interest in the Galvan Ranch Gas Wells to Ruairidh Campbell, who at that time
was one of our officers and directors pursuant to an Assignment and Bill of Sale. In
consideration therefor, Mr. Campbell transferred to us, for cancellation and return to our
authorized but unissued common shares, the 3,250,000 shares of our common stock owned by
him. As a result, since October 6, 2006, we no longer have had any interest in the Galvan
Ranch Gas Wells and are no longer engaged in the oil and gas business in Texas.

Pursuant to a Stock Purchase
Agreement, on October 6, 2006, we acquired 100% of the capital stock of Volga-Neft Limited
Company, a Russian limited liability company primarily engaged in the processing and sale
of crude oil in Samara, Russia (Volga-Neft), in consideration for our issuance
to the stockholders of Volga-Neft of an aggregate of 10,000,000 shares of our common

---

- 12 -

stock, representing at the time 25.6%
of our issued and outstanding shares. Thereafter we advanced $3,000,000 of working capital
to Volga-Neft. Volga-Neft (i) sells to local oil exporters, wholesalers, and distributors
crude oil it has purchased from local oil developers and (ii) processes crude oil
purchased from local oil developers, selling the processed petroleum products in the local
market to oil exporters, wholesalers, and distributors. As a result of this acquisition,
Volga-Neft became our wholly-owned subsidiary.

In April 2007, we were advised that
the financial statements of Volga-Neft purportedly audited by RSM Top-Audit in Russia for
periods prior to our acquisition of Volga-Neft, that we filed with the Securities and
Exchange Commission on a Form 8-K/A on December 8, 2006, should no longer be relied
upon because the individuals who purportedly performed the audit were not the auditing
firms representatives. These financial statements pertain to the audited balance
sheets of Volga-Neft as of October 6, 2006 and December 31 2005, and the related
statements of income, stockholders equity and cash flows for the period
January 1, 2006 through October 6, 2006 and the year ended December 31, 2005. We
filed a Current Report on Form 8-K to disclose these developments on May 11, 2007.

Together with our audit committee, we
are carefully examining the events leading to the auditing firms determination that
the financial statements of Volga-Neft included in our December 8, 2006 Form 8-K/A could
not be relied upon and whether the management of Volga-Neft acted complicitly with those
who prepared the audit. We have engaged special investigative counsel with respect to this
matter. We are continuing our investigation and intend to provide updated disclosure
through a Current Report on Form 8-K when the investigation is completed.

By a Rescission Agreement of Stock
Purchase Agreement dated June 14, 2007 among us, Volga-Neft and the individuals from whom
we acquired the shares of Volga-Neft, the Stock Purchase Agreement was rescinded, we
returned the shares of Volga-Neft we received to the former stockholders who, in turn,
returned to us the 10,000,000 shares of our common stock that we had previously issued. In
addition, Volga-Neft issued a $4,200,000 promissory note in our favor which we, in turn,
sold to an unaffiliated third party on a non-recourse basis for $3,000,000.

We are not currently engaged in an
active business. Our goal is to be engaged in the acquisition, exploration, development,
production in, and sale of oil derived from resources in, the Commonwealth of Independent
States.

As a result of the rescission, we
have not included the assets, liabilities or results of operations of Volga-Neft in our
financial statements for any period. However, the Rescission Agreement does not affect the
rights that any third parties may have against us with respect to agreements, transactions
or events under or with respect to agreements or understandings entered into, or
transactions or events that occurred, prior to the Rescission Agreement or with respect to
breaches of agreements to which we are a party that may have resulted from the Rescission
Agreement.

In this regard, the rescission of the
acquisition of Volga-Neft may result in the acceleration of the maturity of some or all of
our $7,500,000 principal amount of 8% Secured Convertible Debentures we issued in February
2007 and that otherwise would be due on February 11, 2010, or earlier upon acceleration
following an event of default, as defined in the Debentures. See Liquidity and
Capital Resources, below.

---

- 13 -

# RESULTS OF OPERATIONS

# Year ended December 31,
2006 compared to year ended December 31, 2005

# Oil and Gas Revenues

Oil and gas revenues for the year
ended December 31, 2006 decreased to $32,923 from $55,852 for the year ended December 31,
2005, a decrease of approximately 41.1%. The decrease was attributable to our disposition
on October 6, 2006 of our interest in the Galvan Ranch Wells, which was included in our
results of operations for a full year in 2005.

# Operating Expenses

Selling, general and administrative
expenses for the year ended December 31, 2006 increased to $566,474 from $29,562 for the
year ended December 31, 2005, primarily due to the incurrence in 2006 of investor costs
of approximately $210,000, cash salaries of $320,000 for, and approximately $100,000 of expense recognized for financial accounting
purposes under Statement of Financial Accounting Standards No. 123(R) of shares issued to,
officers and directors, an approximate $75,000 increase in legal and accounting fees, travel expenses of approximately $45,000 and
website design costs of approximately $20,000.

Production costs for the year ended
December 31, 2006 decreased by $12,449, or 47.3%, to $13,849 in 2006 from $26,298 in 2005
due to our disposition of the Galvan Ranch Wells.

Depreciation expenses for the year
ended December 31, 2006 decreased by $3,500, or 57.3%, to $2,611 in 2006 from $6,111 in
2005 also due to our disposition of the Galvan Ranch Wells.

The debt forgiven income of $30,000
in 2006 related to the forgiveness by Ruairidh Campbell, as part of our disposition to
him of the Galvan Ranch Wells, of monies owed by us to him.

The rescission of our acquisition of
Volga-Neft discussed in Liquidity and Capital Resources, below, resulted in
$650,000 of associated costs.

# Net Losses

Net loss for the twelve month period
ended December 31, 2006, was $1,170,011 compared with a net loss of $35,833 for the
comparable period ended December 31, 2005.

# LIQUIDITY AND CAPITAL
RESOURCES

Our cash of $1,703 at December 31,
2006 was $12,272 less than at December 31, 2005.

In 2006, operating activities used
$15,087 of cash. Our loss for financial reporting purposes for the year of $1,170,000
resulted from non-cash expenses of $1,184,250 as a result of our issuance of our common
stock to our officers, directors and consultants for services and $2,611 of
depreciation. Thus, we had a cash profit of $16,850.

Changes in our operating assets and
liabilities largely offset each other as increases in accounts payable and accrued
liabilities aggregating $1,038,762 largely offset an increase in prepaid expenses of
$1,078,999 which resulted primarily from the issuance of our common stock to officers,
directors and consultants for services.

Similarly, cash derived from
financing activities, principally our borrowing of $1,000,000 from a merchant banking firm,
offset a $1,000,000 advance made to Volga-Neft to provide working
capital.

We are not currently generating cash
from operations and as of June 10, 2007 had no lines of credit or other bank financing
arrangements.

To obtain working capital, on
February 9, 2007, we entered into a Securities Purchase Agreement with institutional
investors pursuant to which we sold $7,500,000 principal amount of our 8% Secured
Convertible Debentures for a total gross purchase price of $7,500,000 (the Debenture
Financing). We paid Rodman & Renshaw LLC, placement agent for the Debenture
Financing, $525,000 (7% of the gross proceeds from the sale of such Debentures), plus
$25,000 in reimbursement of its expenses, under a placement agency agreement dated
February 9, 2007.

---

- 14 -

Of the net proceeds of the Debenture
Financing, estimated at $6,975,000, we advanced $3,000,000 to Volga-Neft for the payment
of its liabilities. At the time of the rescission of our acquisition of Volga-Neft, we
received, in addition to the return of the 10,000,000 shares of our common stock that we
had issued in consideration for our acquisition, a $4,200,000 promissory note in full
settlement of all monetary claims we may have against Volga-Neft or its stockholders from
which we acquired Volga-Neft. We, in turn, sold the promissory note to an unaffiliated
third partyon a non-recourse basis for $3,000,000.

We intend to use these proceeds and
the balance of the funds obtained in the Debenture Financing, to fund strategic
initiatives and to repay certain liabilities. We expect such funds to be sufficient to
fund our operations in 2007.

The unpaid principal amount of the
Debentures, together with accrued but unpaid interest and any other amounts due thereon,
is due and payable on February 11, 2010, or earlier upon acceleration following an event
of default, as defined in the Debentures. As a result of the rescission on June 14, 2007
of the Stock Purchase Agreement which resulted in the return by us of all of the capital
stock of Volga-Neft to the former shareholders thereof and the return by them

to us of 10,000,000 shares of our
common stock, each holder of an 8% Secured Debenture issued by us as part of the offering
and sale of an aggregate $7,500,000 of the Debentures in February 2007 may elect,
commencing June 28, 2007 as a result of the rescission of the Volga-Neft acquisition, to
declare the outstanding principal amount of such holders Debenture, plus accrued
and unpaid interest, liquidated damages and other amounts owing in respect of the holders
Debenture due and payable at its Mandatory Default Amount. The Mandatory
Default Amount is defined in the Debenture, which, at a minimum would be 130% of the
outstanding principal amount of the Debenture plus all accrued and unpaid interest
thereon. Commencing five trading days after the occurrence of an event of default that
results in the eventual acceleration of a Debenture, the interest rate on the Debenture
shall accrue interest at an interest rate equal to the lesser of 18% per annum or the
maximum rate permitted under applicable law.

Pursuant to the terms of a
Registration Rights Agreement by and between us and the purchasers of the Debentures,
dated as of February 9, 2007, we agreed to prepare and file by April 15, 2007 with
the Securities and Exchange Commission a registration statement on Form SB-2 for the
purpose of registering for resale all of the shares of our common stock issuable upon
conversion of the Debentures and the exercise of the Warrants. We have not, to date,
filed the Registration Statement. The Registration Rights Agreement provided that, if we
did not file the Registration Statement by April 15, 2007, the Registration
Statement were not declared effective by the Securities and Exchange Commission by July 15,
2007, and in certain other circumstances (including if the Registration Statement did not
remain continuously effective except for certain limited periods for specified reasons),
we are to pay, on the applicable date and each monthly anniversary of that date, as
partial liquidated damages, 1.5% of the principal amount of the Debentures then held by
the Debentureholders. If we fail to pay any of these amounts within seven days after the
date payable, the Registration Rights Agreement provides that we are to pay interest
thereon at the rate of 18% per annum.

# OFF-BALANCE SHEET
FINANCING

The Company has no off-balance sheet
financing arrangements, within the meaning of Item 303(c) of Securities and Exchange
Commission Regulation S-B

---

- 15 -

|ITEM 7 |  | FINANCIAL
STATEMENTS
|------ |  | --------------------

# STAR ENERGY CORPORATION(A
DEVELOPMENT STAGE COMPANY)

FINANCIAL STATEMENTS

YEARS ENDED DECEMBER
31, 2006 AND 2005

# CONTENTS

|                                                               |   
|-------------------------------------------------------------- | --
|Report of Registered Independent Auditors - 2006               | 16
|                                                              
|Report of Independent Registered Public Accounting Firm - 2005 | 17
|                                                              
|Balance Sheets                                                 | 18
|                                                              
|Statements of Operations and Comprehensive Loss                | 19
|                                                              
|Statements of Stockholders' Equity                             | 20
|                                                              
|Statements of Cash Flows                                       | 21
|                                                              
|Notes to Financial Statements                                  | 22

---

- 16 -

# REPORT OF REGISTERED
INDEPENDENT AUDITORS

To the Board of Directors and
Stockholders
of Star Energy Corporation:

We
have audited the accompanying balance sheet of Star Energy Corporation (a
development stage company) (the Company) as of December 31, 2006 and the
related statements of operations and comprehensive loss, stockholders equity and
cash flows for the year ended December 31, 2006, and the period from re-entering the
development stage (October 6, 2006) through to December 31, 2006. These financial
statements are the responsibility of the Companys management. Our responsibility is
to express an opinion on these financial statements based on our audit.

We
conducted our audit in accordance with the standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free of
material misstatement. The Company is not required to have, nor were we engaged to
perform, an audit of its internal control over financial reporting. Our audit included
consideration of internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Companys internal control over
financial reporting. Accordingly, we express no such opinion. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall financial
statement presentation. We believe our audit provides a reasonable basis for our opinion.

In
our opinion, based on our audit, the financial statements referred to above present
fairly, in all material respects, the financial position of the Company as of December 31,
2006 and the results of its operations and its cash flows for the year ended December 31,
2006 and the period from re-entering the development stage (October 6, 2006) through to
December 31, 2006, in conformity with accounting principles generally accepted in the
United States of America.

|                |                      
|--------------- | ---------------------
|                | SF PARTNERSHIP, LLP  
|               
|               
|Toronto, Canada | CHARTERED ACCOUNTANTS
|June 18, 2007  

---

- 17 -

# REPORT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors of
Star Energy Corporation

We
have audited the  accompanying  balance sheet of Star Energy  Corporation  as at December
31, 2005, and the related  statements of income,  stockholders'  equity,  and cash flows
for the year then ended. These financial statements are the  responsibility  of the
Company's  management.  Our  responsibility  is to express an opinion on these financial
statements based on our audit.

We
conducted  our audits in  accordance  with the  standards of the Public  Company
 Accounting  Oversight Board (United States).  These standards require that we plan and
perform the audit to obtain  reasonable  assurance about whether the financial statements
are free of material  misstatement.  An audit includes examining,  on a test basis,
 evidence  supporting  the amounts and  disclosures  in the  financial  statements.  An
audit also  includes assessing the accounting  principles used and significant  estimates
made by management,  as well as evaluating the overall financial statement presentation.
 We believe that our audit provides a reasonable basis for our opinion.

In
our opinion, the financial  statements referred to above present fairly, in all material
respects,  the financial  position  of the Company as of December  31, 2005 and the
results of its  operations  and its cash flows for the year then ended, in conformity
with US generally accepted accounting principles.

Jones Simkins, P.C.
Logan, Utah
March 18, 2006

---

- 18 -

STAR ENERGY CORPORATION
(A DEVELOPMENT STAGE COMPANY)
Balance Sheets 
December 31, 2006 and 2005

|                                                                         | 2006 |  | 2005
|------------------------------------------------------------------------ | ---- |  | ----
|ASSETS                                                                   |      | 
|Current                                                                  |      |  |     
|Cash                                                                     |      |  | $   
|Accounts receivable                                                      |      |  |     
|Prepaid expenses                                                         |      |  |     
|Loan receivable (note 3)                                                 |      |  |     
|                                                                         |      | 
|Total Current Assets                                                     |      |  |     
|Oil and Gas Properties  (notes 4 and 8)                                  |      |  |     
|                                                                         |      | 
|                                                                         |      | 
|Total Assets                                                             |      |  | $   
|                                                                         |      | 
|                                                                         |      | 
|LIABILITIES                                                              |      | 
|Current                                                                  |      | 
|Accounts payable                                                         |      |  | $   
|Accrued liabilities                                                      |      |  |     
|Advance from related party (note 5)                                      |      |  |     
|Loan payable (note 6)                                                    |      |  |     
|                                                                         |      | 
|                                                                         |      | 
|Total Current Liabilities                                                |      |  |     
|Asset Retirement Obligation(note 7)                                      |      |  |     
|                                                                         |      | 
|                                                                         |      | 
|Total Liabilities                                                        |      |  |     
|                                                                         |      | 
|                                                                         |      | 
|STOCKHOLDERS' EQUITY                                                     |      | 
|Capital Stock(note 8)                                                    |      | 
|Authorized                                                               |      | 
|5,000,000  preferred stock, par value $0.001 per share                   |      | 
|225,000,000  common stock, par value $0.001 per share                    |      | 
|Issued                                                                   |      | 
|28,737,500  common stock (2005 - 31,562,500)                             |      |  |     
|Additional Paid-in Capital                                               |      |  |     
|Accumulated Deficit and Deficit Accumulated During the Development Stage |      |  |     
|                                                                         |      | 
|                                                                         |      | 
|Total Stockholders' Equity                                               |      |  |     
|                                                                         |      | 
|                                                                         |      | 
|Total Liabilities and Stockholders' Equity                               |      |  | $   
|                                                                         |      | 

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

---

- 19 -

STAR ENERGY CORPORATION
(A DEVELOPMENT STAGE COMPANY)
Statements of Operations and Comprehensive Loss
Years Ended December 31, 2006 and 2005, and the Period 
from Re-entering the Development Stage through to December 31, 2006

|                                                   | 2006 |  | 2005 |            | (Note 1)
Period from
Re-entering the
Development
Stage through to
Dec. 31, 2006
|-------------------------------------------------- | ---- |  | ---- | ---------- | -------------------------------------------------------------------------------
|                                                  
|Oil and Gas Revenues                               |      |  | $    | 32,923     |                                                                                
|                                                   |      | 
|                                                   |      | 
|Operating Expenses                                 |      | 
|Selling, general and administrative                |      |  |      | 566,474    |                                                                                
|Production costs                                   |      |  |      | 13,849     |                                                                                
|Depreciation                                       |      |  |      | 2,611      |                                                                                
|                                                   |      | 
|                                                   |      | 
|Total Operating Expenses                           |      |  |      | 582,934    |                                                                                
|                                                   |      | 
|                                                   |      | 
|Operating Loss                                     |      |  |      | (550,011   | )                                                                              
|                                                   |      | 
|                                                   |      | 
|Other Income (Expense)                             |      | 
|Debt forgiven                                      |      |  |      | 30,000     |                                                                                
|Loss on assets sold or abandoned                   |      |  |      | -          |                                                                                
|Costs associated with the rescission of the        |      | 
|stock purchase agreement (note 10)                 |      |  |      | (650,000   | )                                                                              
|                                                   |      | 
|                                                   |      | 
|Total Other Expense                                |      |  |      | (620,000   | )                                                                              
|                                                   |      |  |      |            |                                                                                
|                                                   |      | 
|Net Loss and Comprehensive Loss                    |      |  | $    | (1,170,011 | )                                                                              
|                                                   |      | 
|                                                   |      | 
|Basic and Diluted Loss Per Weighted Average Number |      | 
|of Shares Outstanding During the Year              |      |  | $    | (0.0380    | )                                                                              
|                                                   |      | 
|                                                   |      | 
|Basic and Diluted Weighted Average Number          |      | 
|of Shares Outstanding During the Year              |      |  |      | 30,734,375 |                                                                                
|                                                   |      | 

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

---

- 20 -

STAR ENERGY CORPORATION 
(A DEVELOPMENT STAGE COMPANY)
Statements of Stockholders Equity
Years Ended December 31, 2006 and 2005, and the Period from 
Re-entering the Development Stage through to December 31, 2006

|                                           | Number of
Common
Shares |  | Capital
Stock |            | Additional
Paid-in
Capital |   | Accumulated
Deficit and
Deficit
Accumulated
During the
Development
Stage |   | Stockholders'
Equity
|------------------------------------------ | ----------------------- |  | ------------- | ---------- | -------------------------- | - | ------------------------------------------------------------------------ | - | --------------------
|                                           |                         | 
|Balance, January 1, 2005                   |                         |  |               | 31,562,500 |                            | $ | 31,563                                                                   |   | $                   
|                                           |                         | 
|Net loss for year                          |                         |  |               | -          |                            |   | -                                                                        |   |                     
|                                           |                         | 
|Balance, December 31, 2005                 |                         |  |               | 31,562,500 |                            | $ | 31,563                                                                   |   | $                   
|                                           |                         | 
|Balance, January 1, 2006                   |                         |  |               | 31,562,500 |                            | $ | 31,563                                                                   |   | $                   
|                                           |                         | 
|Common shares cancelled (note 8)           |                         |  |               | (3,250,000 | )                          |   | (3,250                                                                   | ) |                     
|                                           |                         | 
|Common shares issued for services (note 8) |                         |  |               | 425,000    |                            |   | 425                                                                      |   |                     
|                                           |                         | 
|Net loss for year                          |                         |  |               | -          |                            |   | -                                                                        |   |                     
|                                           |                         | 
|Balance, December 31, 2006                 |                         |  |               | 28,737,500 |                            | $ | 28,738                                                                   |   | $                   
|                                           |                         | 

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

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- 21 -

STAR ENERGY CORPORATION 
(A DEVELOPMENT STAGE COMPANY) 
Statements of Cash Flows
Years Ended December 31, 2006 and 2005, and the Period from 
Re-entering the Development Stage through to December 31, 2006

|                                                 | 2006 |  | 2005 |            | (Note 1)
Period from
Re-entering the
Development
Stage through to
Dec. 31, 2006
|------------------------------------------------ | ---- |  | ---- | ---------- | -------------------------------------------------------------------------------
|                                                
|
|Cash Flows from Operating Activities             |      |  |      |            |                                                                                
|Net loss                                         |      |  | $    | (1,170,011 | )                                                                              
|Adjustments to reconcile non-cash items:         |      | 
|Loss on assets abandoned                         |      |  |      | -          |                                                                                
|Depreciation                                     |      |  |      | 2,611      |                                                                                
|Issuance of common stock for services            |      |  |      | 1,184,250  |                                                                                
|                                                 |      | 
|                                                 |      |  |      | 16,850     |                                                                                
|                                                 |      | 
|Changes in non-cash working capital:             |      | 
|Accounts receivable                              |      |  |      | 8,291      |                                                                                
|Prepaid expenses                                 |      |  |      | (1,078,990 | )                                                                              
|Accounts payable                                 |      |  |      | 373,762    |                                                                                
|Accrued liabilities                              |      |  |      | 665,000    |                                                                                
|                                                 |      | 
|                                                 |      | 
|Net Cash Used in Operating Activities            |      |  |      | (15,087    | )                                                                              
|                                                 |      | 
|                                                 |      | 
|Cash Flows from Investing Activities             |      | 
|Loan receivable                                  |      |  |      | (1,000,000 | )                                                                              
|Short term deposit                               |      |  |      | -          |                                                                                
|Proceeds from disposal of oil and gas properties |      |  |      | 44,403     |                                                                                
|                                                 |      | 
|Net Cash Used in Investing Activities            |      |  |      | (955,597   | )                                                                              
|                                                 |      | 
|                                                 |      | 
|Cash Flows from Financing Activities             |      | 
|Cancellation of common shares on sale of oil     |      | 
|and gas properties                               |      |  |      | (44,373    | )                                                                              
|Loan payable                                     |      |  |      | 1,000,000  |                                                                                
|Advance from related party                       |      |  |      | 2,785      |                                                                                
|                                                 |      | 
|                                                 |      | 
|Net Cash Provided by Financing Activities        |      |  |      | 958,412    |                                                                                
|                                                 |      | 
|                                                 |      | 
|Net Decrease in Cash                             |      |  |      | (12,272    | )                                                                              
|                                                 |      | 
|Cash - Beginning of Year                         |      |  |      | 13,975     |                                                                                
|                                                 |      | 
|                                                 |      | 
|Cash - End of Year                               |      |  | $    | 1,703      |                                                                                
|                                                 |      | 

Supplemental Information
During the year, the Company had no cash flows arising from interest and income taxes paid.

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

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- 22 -

STAR ENERGY CORPORATION (A
DEVELOPMENT STAGE COMPANY)
Notes to Financial Statements
December 31, 2006 and 2005

|1. |  | Description
of Business
|-- |  | -----------------------

| | Star
Energy Corporation (the Company) was organized under the laws of the state of
Nevada on December 7, 1999. The Company is primarily engaged in the business of selling
oil and gas produced from its oil and gas properties, as well as acquiring, developing
and selling oil and gas properties to companies located in the continental United States.
The Companys principal operations began in June 2003 when it purchased an interest
in eight oil and gas producing wells. On October 6, 2006, the Company was considered to
have re-entered the development stage.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|2. |  | Summary
of Significant Accounting Policies
|-- |  | ------------------------------------------

| | The
accounting policies of the Company are in accordance with U.S. generally accepted
accounting principles, and their basis of application is consistent with that of the
previous year. Outlined below are those policies considered particularly significant:
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | a) |  | Reporting
Currency
| | -- |  | ------------------

| | The
U.S. Dollar has been used as the unit of measurement in these financial statements.
| | ---------------------------------------------------------------------------------------

| | b) |  | Oil
and Gas Producing Activities
| | -- |  | --------------------------------

| | The
Company utilizes the successful efforts method of accounting for its oil and gas
producing activities. Under this method, all costs associated with productive exploratory
wells and productive or nonproductive development wells are capitalized while the costs
of nonproductive exploratory wells are expensed.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | If
an exploratory well finds oil and gas reserves, but a determination that such reserves
can be classified as proved is not made after one year following completion of drilling,
the costs of drilling are charged to operations. Indirect exploratory expenditures,
including geophysical costs and annual lease rentals are expensed as incurred. Unproved
oil and gas properties that are individually significant are periodically assessed for
impairment of value and a loss is recognized at the time of impairment allowance. Other
unproved properties are amortized based on the Companys experience of successful
drillings and average holding period. Capitalized costs of producing oil and gas
properties after considering estimated dismantlement and abandonment costs and estimated
salvage values, are depreciated and depleted by the units-of-production method. Support
equipment and other property and equipment are depreciated over their estimated useful
lives. The Company evaluates purchases for potential intangible items. However, all
intangible items have been determined to be insignificant.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

- 23 -

STAR ENERGY CORPORATION (A
DEVELOPMENT STAGE COMPANY)
Notes to Financial Statements
December 31, 2006 and 2005

|2. |  | Summary
of Significant Accounting Policies (contd)
|-- |  | ---------------------------------------------------

| | b) |  | Oil
and Gas Producing Activities (contd)
| | -- |  | -----------------------------------------

| | On
the sale or retirement of a complete unit of a proved property, the cost and related
accumulated depreciation, depletion and amortization are eliminated from the property
accounts, and the resultant gain or loss is recognized. On the retirement or sale of a
partial unit of proved property, the cost is charged to accumulated depreciation,
depletion and amortization with a resulting gain or loss recognized in income.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | On
the sale of an entire interest in an unproved property for cash or cash equivalent, gain
or loss on the sale is recognized, taking into consideration the amount of any recorded
impairment if the property has been assessed individually. If a partial interest in an
unproved property is sold, the amount received is treated as a reduction of the cost of
the interest retained.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | c) |  | Revenue
Recognition
| | -- |  | -------------------

| | Revenue
is recognized from oil sales at such time as the oil is delivered to the buyer. Revenue
is recognized from gas sales when the gas passes through the pipelines at the well head.
The Company believes that both oil and gas revenues should be recognized at these times
because ownership of the oil and gas generally passes to the customer at these times.
Management believes that this policy meets the criteria of the Security and Exchange
Commission Staff Accounting Bulletin No. 101 Revenue Recognition in Financial
Statements in that there is persuasive evidence of an existing contract or
arrangement, delivery has occurred, the price is fixed and determinable and
collectability is reasonably assured.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
Company does not have any gas balancing arrangements.
| | ---------------------------------------------------------

| | d) |  | Asset
Retirement Obligation
| | -- |  | ---------------------------

| | The
Company has recognized a liability based on the present value of the estimated costs
related to its obligation to plug and abandon the oil and gas wells its owns. The Company
has also capitalized the costs of the liability through increasing the carrying amount of
its oil and gas properties. The liability is accreted to its present value each period,
and the capitalized cost is depreciated over the useful life of the related asset. Upon
settlement of the liability, the Company will settle the obligation for its recorded
amount or incur a gain or loss upon settlement.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | e) |  | Financial
Instruments
| | -- |  | ---------------------

| | Unless
otherwise noted, it is managements opinion that the Company is not exposed to
significant interest, currency or credit risks arising from the financial instruments.
The fair value of the financial instruments approximates their carrying values, unless
otherwise noted.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

- 24 -

STAR ENERGY CORPORATION (A
DEVELOPMENT STAGE COMPANY)
Notes to Financial Statements
December 31, 2006 and 2005

|2. |  | Summary
of Significant Accounting Policies (contd)
|-- |  | ---------------------------------------------------

| | f) |  | Comprehensive
Income (Loss)
| | -- |  | ---------------------------

| | The
Company adopted Statement of Financial Accounting Standards (SFAS) No. 130,
Reporting Comprehensive Income. (SFAS No. 130). SFAS No. 130
establishes standards for reporting and presentation of comprehensive income (loss) and
its components in a full set of financial statements. Comprehensive income (loss) is
presented in the statements of operations, and consists of net income and unrealized
gains (losses) on available for sale marketable securities; foreign currency translation
adjustments and changes in market value of future contracts that qualify as a hedge; and
negative equity adjustments recognized in accordance with SFAS No. 87. SFAS No. 130
requires only additional disclosures in the financial statements and does not affect the
Companys financial position or results of operations.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | g) |  | Income
Tax
| | -- |  | ----------

| | The
Company accounts for income taxes pursuant to SFAS No. 109, Accounting for Income
Taxes (SFAS No. 109). Deferred taxes are provided under a liability
method whereby deferred tax assets are recognized for deductible temporary differences,
and deferred tax liabilities are recognized for taxable temporary differences. Temporary
differences are the differences between the reported amounts of assets and liabilities
and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in
the opinion of management, it is more likely than not that some portion or all of the
deferred tax assets will not be realized. Deferred tax assets and liabilities are
adjusted for the effects of changes in tax laws and rates on the date of enactment.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | h) |  | Impairment
of Long-Lived Assets
| | -- |  | -------------------------------

| | The
Company evaluates the recoverability of long-lived assets and the related estimated
remaining lives when events or circumstances lead management to believe that the carrying
value of an asset may not be recoverable. Recoverability is assessed based on the
carrying amount of a long-lived asset compared to the sum of the future undiscounted cash
flows expected to result from the use and the eventual disposal of the asset. An
impairment loss is recognized when the carrying amount is not recoverable and exceeds the
total undiscounted cash flows expected from its use and disposition. For the periods
ended December 31, 2006 and December 31, 2005, no events or circumstances occurred for
which an evaluation of the recoverability of long-lived assets was required.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

- 25 -

STAR ENERGY CORPORATION (A
DEVELOPMENT STAGE COMPANY)
Notes to Financial Statements
December 31, 2006 and 2005

|2. |  | Summary
of Significant Accounting Policies (contd)
|-- |  | ---------------------------------------------------

| | i) |  | Earnings
(Loss) per Share
| | -- |  | -------------------------

| | The
Company adopted SFAS No.128, Earnings per Share which requires disclosure on
the financial statements of basic and diluted earnings (loss) per share. Basic earnings
(loss) per share is computed by dividing net income (loss) by the weighted average number
of common shares outstanding for the year. In contrast, diluted earnings (loss) per share
considers the potential dilution that occurs from other financial instruments that would
increase the total number of outstanding shares of common stock.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | j) |  | Pension
and Post-employment Benefits
| | -- |  | ------------------------------------

| | The
Companys mandatory contributions to the governmental pension plan are expensed when
incurred. Discretionary pensions and other post-employment benefits are not material.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | k) |  | Concentration
of Credit Risk
| | -- |  | ----------------------------

| | SFAS
No. 105, Disclosure of Information About Financial Instruments with Off-Balance
Sheet Risk and Financial Instruments with Concentration of Credit Risk, requires
disclosure of any significant off-balance-sheet risk and credit risk concentration. The
Company does not have significant off-balance-sheet risk or credit concentration.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
Company provides credit to its clients in the normal course of its operations. It carries
out, on a continuing basis, credit checks on its clients and maintains provisions for
contingent credit losses that, once they materialize, are consistent with managements
forecasts.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | For
other receivables, the Company determines, on a continuing basis, the probable losses and
sets up a provision for losses based on the estimated realizable value.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | l) |  | Use
of Estimates
| | -- |  | ----------------

| | Preparation
of financial statements in conformity with U.S. generally accepted accounting principles
requires management to make estimates and assumptions that affect the amounts reported in
the financial statements and related notes to financial statements. These estimates are
based on managements best knowledge of current events and actions the Company may
undertake in the future. Actual results may ultimately differ from those estimates,
although management does not believe such changes will materially affect the financial
statements in any individual year.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

- 26 -

STAR ENERGY CORPORATION (A
DEVELOPMENT STAGE COMPANY)
Notes to Financial Statements
December 31, 2006 and 2005

|2. |  | Summary
of Significant Accounting Policies (contd)
|-- |  | ---------------------------------------------------

| | m) |  | Share-Based
Payment
| | -- |  | -------------------

| | The
Company adopted the disclosure requirements of Statement of Financial Accounting
Standards (SFAS) No. 123R, Share-Based Payment (SFAS No.
123R) for stock options and similar equity instruments (collectively, options)
issued to employees. The Company applies the fair value base method of accounting as
prescribed by SFAS No. 123R. Under the fair value based method, compensation cost is
measured at the grant date based on the value of the award and is recognized over the
service period, which is usually the vesting period. For stock options, the fair value is
determined using an option-pricing model that takes into account the stock price at the
grant date, the exercise price, the expected life of the option, the volatility of the
underlying stock and the expected dividends on it, and the risk-free interest rate over
the expected life of the option. SFAS No. 123R also applies to transactions in which an
entity issues its equity instruments to acquire goods or services from non-employees.
Those transactions must be accounted for based on the fair value of the consideration
received or the fair value of the equity instruments issued, whichever is more reliably
measurable.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | n) |  | Recent
Accounting Pronouncements
| | -- |  | --------------------------------

| | In
February 2006, the Financial Accounting Standards Board (FASB) issued SFAS
No. 155, Accounting for Certain Hybrid Financial Instruments an Amendment to FASB
Statements No. 133 and 140 (SFAS No. 155). This statement permits fair
value of remeasurement for any hybrid financial instrument that contains an embedded
derivative that otherwise would require bifurcation; clarifies which interest-only strips
and principal-only strips are not subject to the requirements of SFAS No. 133, Accounting
for Derivative Instruments and Hedging Activities; establishes a requirement to
evaluate interests in securitized financial assets to identify interests that. are
freestanding derivatives or that are hybrid financial instruments that contain an
embedded derivative requiring bifurcation; clarifies that concentrations of credit risk
in the form of subordination are not embedded derivatives; and amended SFAS No. 140,
Accounting for Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities a replacement of FASB Statement No. 125 (SFAS No. 140), to
eliminate the prohibition on a qualifying special-purpose entity from holding a
derivative financial instrument that pertains to a beneficial interest other than another
derivative financial instrument. SFAS No. 155 is effective for all financial instruments
acquired, issued, or subject to a remeasurement (new basis) event occurring after the
beginning of an entitys first fiscal year that begins after September 15, 2006. The
Company is currently reviewing the effect, if any, the proposed guidance will have on its
financial statements.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

- 27 -

STAR ENERGY CORPORATION (A
DEVELOPMENT STAGE COMPANY)
Notes to Financial Statements
December 31, 2006 and 2005

|2. |  | Summary
of Significant Accounting Policies (contd)
|-- |  | ---------------------------------------------------

| | n) |  | Recent
Accounting Pronouncements (contd)
| | -- |  | -----------------------------------------

| | In
March 2006, FASB issued SFAS No. 156, Accounting for Servicing of Financial Assets
 An Amendment of FASB Statement No.140 (SFAS No. 156). In a
significant change to current guidance, SFAS No. 156 permits an entity to choose either
of the following subsequent measurement methods for each class of separately recognized
servicing assets and servicing liabilities: (1) amortization method or (2) fair value
measurement method. SFAS No. 156 is effective for fiscal years that begin after September
15, 2006. The Company is currently reviewing the effect, if any, the proposed guidance
will have on its financial position and results of operations.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
April 2006, the FASB issued FSP No. 46(R)-6, Determining the Variability to be
Considered in Applying FASB Interpretation No. 46(R) (FSP FIN No. 46(R)-6).
FSP FIN No. 46(R)-6 provides accounting guidance on how to distinguish between
arrangements that create variability (i.e., the risks and rewards) within an entity and
arrangements that are subject to that variability (i.e., variable interests). FSP FIN No.
46(R)-6 is responding to a need for accounting guidance on arrangements that can be
either assets or liabilities (i.e., derivative financial instruments). FSP FIN No.
46(R)-6 is effective for the first fiscal period that begins after June 15, 2006. The
Company is currently reviewing the effect, if any, the proposed guidance will have on its
financial position.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
June 2006, the FASB issued Financial Accounting Standards Interpretation (FIN)
FIN No. 48, Accounting for Uncertainty in Income Taxes an interpretation of FASB
Statement No. 109 (FIN No. 48). FIN No. 48 clarifies the accounting for
uncertainty in income taxes recognized in an enterprises financial statements in
accordance with SFAS No. 109. The interpretation prescribes a recognition threshold and
measurement attribute for the financial statement recognition and measurement of a tax
position taken or expected to be taken in a tax return. FIN No. 48 also provides
accounting guidance on recognition, classification, interest and penalties, accounting in
interim periods, disclosure and transition. FIN No. 48 is effective for fiscal years
beginning after December 15, 2006. The Company is currently reviewing the effect, if any,
the proposed guidance will have on its financial position.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
September 2006, FASB issued SFAS No. 157, Fair Value Measurements, (SFAS
No. 157) which is effective for calendar year companies on January 1, 2008. The
statement defines fair value, establishes a framework for measuring fair value in
accordance with generally accepted accounting principles, and expands disclosures about
fair value measurements. The statement codifies the definition of fair value as the price
that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date. The standard clarifies
the principle that fair value should be based on the assumptions market participants
would use when pricing the asset or liability and establishes a fair value hierarchy that
prioritises the information used to develop those assumptions. The Company is currently
assessing the potential impacts of implementing this standard.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

- 28 -

STAR ENERGY CORPORATION (A
DEVELOPMENT STAGE COMPANY)
Notes to Financial Statements
December 31, 2006 and 2005

|2. |  | Summary
of Significant Accounting Policies (contd)
|-- |  | ---------------------------------------------------

| | n) |  | Recent
Accounting Pronouncements (contd)
| | -- |  | -----------------------------------------

| | In
February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial
Assets and Liabilities (SFAS No. 159), which permits entities to
measure many financial instruments and certain other items at fair value that are not
currently required to be measured at fair value. An entity would report unrealized gains
and losses on items for which the fair value option has been elected in earnings at each
subsequent reporting date. The objective is to improve financial reporting by providing
entities with the opportunity to mitigate volatility in reported earnings caused by
measuring related assets and liabilities differently without having to apply complex
hedge accounting provisions. The decision about whether to elect the fair value option is
applied instrument by instrument, with a few exceptions; the decision is irrevocable; and
it is applied only to entire instruments and not to portions of instruments.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
statement requires disclosures that facilitate comparisons (a) between entities that
choose different measurement attributes for similar assets and liabilities and (b)
between assets and liabilities in the financial statements of an entity that selects
different measurement attributes for similar assets and liabilities.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | SFAS
No. 159 is effective for fiscal years beginning after November 15, 2007. Early adoption
is permitted as of the beginning of a fiscal year provided the entity also elects to
apply the provisions of SFAS No. 157. Upon implementation, an entity shall report the
effect of the first remeasurement to fair value as a cumulative-effect adjustment to the
opening balance of retained earnings. Since the provisions of SFAS No. 159 are applied
prospectively, any potential impact will depend on the instruments selected for fair
value measurement at the time of implementation.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
May, 2007 the FASB issued FIN No. 48-1, Definition of Settlement in FASB
Interpretation 48 (FIN 48-1). FIN 48-1 amends FIN 48, to provide
guidance on how an enterprise should determine whether a tax position is effectively
settled for the purpose of recognizing previously unrecognized tax benefits. The guidance
in FIN 48-1 shall be applied upon the initial adoption of FIN 48, and accordingly, the
Company will apply the provisions of FIN 48-1 effective January 1, 2007. The Company is
currently reviewing the effect, if any, the proposed guidance will have on its financial
position.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

- 29 -

STAR ENERGY CORPORATION (A
DEVELOPMENT STAGE COMPANY)
Notes to Financial Statements
December 31, 2006 and 2005

|3. |  | Loan
Receivable
|-- |  | ---------------

| | The
loan receivable from Volga-Neft Limited Company (Volga-Neft), a society with
limited liability organized under the laws of the Russian Federation, bears interest at
4% per annum, matures December 8, 2008 and is secured by the assets of Volga-Neft and by
a guarantee from Volga-Neft.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | On
June 14, 2007, the Company rescinded the October 6, 2006 purchase of Volga-Neft (see note
10). As part of the rescission agreement, the loan to Volga-Neft were converted to a
promissory note. The note is non-interest bearing if the principal is repaid by September
1, 2007. On June 18, 2007 the note was repaid.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4. |  | Oil
and Gas Properties
|-- |  | ----------------------

| | Oil
and gas properties are comprised as follows:
| | ------------------------------------------------

|                                                         | Cost |  | 2006
Accumulated
Depletion and
Amortization |   | Cost |   | 2005
Accumulated
Depletion and
Amortization | 
|-------------------------------------------------------- | ---- |  | ------------------------------------------- | - | ---- | - | ------------------------------------------- | 
|Proved oil and gas properties and related equipment      |      |  | $                                           | - |      | $ | -                                           | 
|                                                         |      | 
|Capitalized costs related to asset retirement obligation |      |  |                                             | - |      |   | -                                           | 
|                                                         |     
|                                                         |      |  | $                                           | - |      | $ | -                                           | 
|                                                         |     
|                                                         |      | 
|Net carrying amount                                      |      |  | $                                           | - |      | $ | -                                           | 
|                                                         |      |  |                                             |   |     

|5. |  | Advance
from Related Party
|-- |  | --------------------------

| | The
advance from a director is non-interest bearing, unsecured and has no specified terms of
repayment.
| | -------------------------------------------------------------------------------------------------------

|6. |  | Loan
Payable
|-- |  | ------------

| | The
loan payable to Blue Water Partners is non-interest bearing, unsecured and due on demand.
| | ---------------------------------------------------------------------------------------------

---

- 30 -

STAR ENERGY CORPORATION (A
DEVELOPMENT STAGE COMPANY)
Notes to Financial Statements
December 31, 2006 and 2005

|7. |  | Asset
Retirement Obligation
|-- |  | ---------------------------

| | Following
 is  a  reconciliation  of  the  aggregate  retirement  liability  associated  with  the
 Company's       obligation to plug and abandon its oil and gas properties:
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                             | 2006 |  | 2005 |  
|---------------------------- | ---- |  | ---- | -
|Balance at beginning of year |      |  | $    | -
|Abandonment of wells         |      |  |      | -
|Accretion expense            |      |  |      | -
|                             |      | 
|                             |      | 
|Balance at end of year       |      |  | $    | -
|                             |      | 

|8. |  | Capital
Stock
|-- |  | -------------

| | On
October 6, 2006, an assignment and bill of sale was entered into between the Company and
Ruairidh Campbell, a former officer and director of the Company. Pursuant to the
assignment, Mr. Campbell agreed to transfer to the Company his 3,250,000 shares of the
Companys common stock, for cancellation. In consideration thereof, the Company
agreed to assign to Mr. Campbell the Companys interest in and to certain oil and
gas wells known as the Galvan Ranch Gas Wells, which are located in Webb County, Texas.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | On
November 29, 2006, the Company issued 400,000 common shares for salaries valued at
$1,113,000.
| | -------------------------------------------------------------------------------------------------

| | On
December 18, 2006, the Company issued 25,000 common shares for salaries value at $71,250.
| | --------------------------------------------------------------------------------------------

|9. |  | Income
Taxes
|-- |  | ------------

| | The
Company accounts for income taxes pursuant to SFAS No. 109. This standard prescribes the
use of the liability method whereby deferred tax asset and liability account balances are
determined based on differences between financial reporting and tax bases of assets and
liabilities and are measured using the enacted tax rates. The effects of future changes
in tax laws or rates are not anticipated.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Under
SFAS No. 109 income taxes are recognized for the following: a) amount of tax payable for
the current year, and b) deferred tax liabilities and assets for future tax consequences
of events that have been recognized differently in the financial statements than for tax
purposes.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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- 31 -

STAR ENERGY CORPORATION (A
DEVELOPMENT STAGE COMPANY)
Notes to Financial Statements
December 31, 2006 and 2005

9.    
          Income Taxes(contd)

| | The
provision for income taxes has been computed as follows:
| | ------------------------------------------------------------

|                                                                     |  | 
|-------------------------------------------------------------------- |  | 
|Expected income tax recovery at the statutory rate -31% (2005 - 31%) |  | 
|                                                                     |  | 
|Valuation allowance                                                  |  | 
|                                                                     |  | 
|Provision for income taxes                                           |  | 
|                                                                     |  | 

| | The
Company has tax losses available to be applied against future years income. Due to
the losses incurred in the current period and expected future operating results,
management determined that it is more likely than not that the deferred tax asset
resulting from the tax losses available for carryforward and stock option compensation
expense will not be realized through the reduction of future income tax payments,
accordingly a 100% valuation allowance has been recorded for deferred income tax assets.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | As
of December 31, 2006 and 2005, the Company had approximately $365,000 and $42,000
respectively, of Federal and state net operating loss carryforwards available to offset
future taxable income. The Company has the following losses which expire in 20 years from
the date the loss was incurred.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|            | 
|----------- | 
|Expiry 2025 | 
|Expiry 2026 | 
|            | 
|            | 
|            | 

|10. |  | Rescission
Agreement of Stock Purchase Agreement
|--- |  | ------------------------------------------------

| | On
October 6, 2006 the Company entered into a stock purchase agreement to acquire 100% of
Volga-Neft resulting in the issuance of 10,000,000 restricted common shares, valued at
$11,700,000. However, on June 14, 2007 the Company entered into an agreement to rescind
the October 6, 2006 stock purchase agreement due to the Company discovering material
inaccuracies in certain representations and warranties made by Volga-Neft and the Companys
dissatisfaction with the transactions described in the stock purchase agreement. As a
result of the rescission agreement, Volga-Neft returned the 10,000,000 common shares they
hold in the Company and provided a promissory note in the amount of $4,200,000 covering
the $3,000,000 of loans they received as at June 14, 2007 plus costs and damages
associated with the rescission agreement in the amount of $1,200,000. The promissory note
was subsequently sold for $3,000,000 resulting in a discount of $1,200,000. The
promissory note was collected on June 18, 2007.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

- 32 -

STAR ENERGY CORPORATION (A
DEVELOPMENT STAGE COMPANY)
Notes to Financial Statements
December 31, 2006 and 2005

|10. |  | Rescission
Agreement of Stock Purchase Agreement (contd)
|--- |  | ---------------------------------------------------------

| | In
managements opinion, after consulting with their legal council, as the stock
purchase agreement was rescinded by the Rescission Agreement, the original stock purchase
agreement was nullified and therefore treated as if it never occurred. All parties are
returned to their respective positions before they entered into the stock purchase
agreement.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|11. |  | Subsequent
Event
|--- |  | ----------------

| | On February 9, 2007, the Company entered into a securities purchase agreement, where
the Company sold $7,500,000 in principal amount of convertible debentures. The debentures
are convertible into common shares at the option of the holder at an exercise price of
$2. The debentures bear interest at 8% per annum, are guaranteed by Volga-Neft and are
due three years from their date of issuance. In addition, the debenture holders were
issued warrants which allow the purchaser to purchase up to a number of common shares
equal to 65% of such purchasers subscription amount divided by the initial
conversion price, with an exercise price equal to $3.81, subject to adjustments. As the
Company is in breach of certain covenants the debentures are currently due on demand.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | On
March 1, 2007, the Company issued 250,000 common shares for finance services which were
valued at $870,000.
| | --------------------------------------------------------------------------------------------------------------

| | On
April 11, 2007, the Company issued 20,000 common shares for finance services which were
valued at $76,000.
| | -------------------------------------------------------------------------------------------------------------

| | On
June 14, 2007, the Company signed a rescission agreement as described in note 10 whereby
the purchase of Volga-Neft was rescinded and the loan receivable was repaid.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

- 33 -

|ITEM 8 |  | CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS
|------ |  | ---------------------------------------------

On November 16, 2006, we dismissed
Jones Simkins, P.C. as our principal independent accounting firm, and retained SF
Partnership, LLP as our principal independent registered public accounting firm. The
decision to change accountants was recommended and approved by Stars Board of
Directors.

# The Termination of Jones
Simkins, P.C.

Jones Simkins, P.C. was Stars
independent registered public accounting firm for the previous two fiscal years and for
the period since then until November 16, 2006. None of Jones Simkins, P.C.s reports
on Stars financial statements during either of the previous two fiscal years and for
the period since then until November 16, 2006 (a) contained an adverse opinion or
disclaimer of opinion, or (b) was modified as to uncertainty, audit scope or accounting
principles, which would include an uncertainty regarding the ability to continue as a
going concern, and, during those periods, there were no disagreements on any matters of
accounting principles or practices, financial statement disclosure, or auditing scope or
procedures, which disagreements, if not resolved to the satisfaction of Jones Simkins,
P.C., would have caused it to make reference to the subject matter of the disagreements in
connection with its reports. None of the reportable events set forth in Item
304(a)(1)(iv)(B) of Regulation S-B occurred during the period in which Jones Simkins, P.C.
served as Stars principal independent accountants.

# The Engagement of SF
Partnership, LLP

Prior to November 16, 2006, the date
that SF Partnership, LLP was retained as Stars principal independent registered
public accounting firm:

(1) Neither
Star nor anyone on Stars behalf consulted SF Partnership, LLP           regarding
either the application of accounting principles to a specified           transaction,
either completed or proposed, or the type of audit opinion that           might be
rendered on Stars financial statements;

(2) Neither
a written report nor oral advice was provided to Star by SF Partnership,           LLP
that we concluded was an important factor considered by us in reaching a
          decision as to an accounting, auditing or financial reporting issue; and

(3) Star
did not consult SF Partnership, LLP regarding any matter that was either           the
subject of a disagreement (as defined in Item 304(a)(1)(iv) of
          Regulation S-B and the related instructions) or any of the reportable events
set           forth in Item 304(a)(1)(iv)(B) of Regulation S-B.

|ITEM 8A. |  | CONTROLS
AND PROCEDURES
|-------- |  | -----------------------

# Evaluation of Disclosure
Controls and Procedures

Disclosure controls and procedures
are the controls and other procedures of an issuer that are designed to provide reasonable
assurance that information required to be disclosed by the issuer in the reports that it
files or submits under the Securities Exchange Act of 1934 is recorded, processed,
summarized and reported within the time period specified in the Securities and Exchange
Commissions rules and forms. Disclosure controls and procedures include, without
limitation, controls and procedures designed to ensure that information required to be
disclosed by an issuer in the reports that it files or submits under the Securities
Exchange Act of 1934 is accumulated and communicated to the issuers management,
including its principal executive and principal financial officers, or
persons performing similar functions, as appropriate to allow timely decisions regarding
required disclosure.

---

- 34 -

Under the supervision and with the
participation of our management, including our principal executive officer and principal
financial officer, we evaluated the effectiveness of the design and operation of our
disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the
Securities Exchange Act of 1934 (Exchange Act), as of December 31, 2006 (the
end of the period covered by this report). Based upon this evaluation, our principal
executive officer and principal financial officer concluded that our disclosure controls
and procedures were not effective to ensure that all material information required to be
disclosed in this Annual Report on Form 10-KSB had been recorded and made known to them in
a timely fashion. Specifically, we identified deficiencies in our disclosure controls and
procedures related to the retention, supervision and communication with the appropriate
personnel involved with the audit of Volga-Neft, and in our procedures pertaining to the
engagement of auditors of Volga-Neft. Management evaluated the impact of these control
deficiencies on our company, including our inability to timely file this Form 10-KSB, and
has concluded that the control deficiencies represent a material weakness in our controls.

We have begun an investigation into
the events and procedures involving the Volga-Neft audit and our controls and procedures
regarding engagement and communication with our independent auditors. We believe that any
measures taken with regard to our controls and procedures as a result of the investigation
will benefit us by reducing the likelihood of a similar event occurring in the future.

Additional evaluation is required to
remedy these deficiencies and we are currently in the process of improving and
strengthening our controls and procedures. As part of our efforts to remedy existing
deficiencies we are seeking to improve supervision over our accounts and improve
communication with outside vendors, including auditors we hire. We are also implementing
policies to better define the responsibilities and authority of our audit committee
through the adoption of an audit committee charter.

# Changes in Internal
Controls

Management has not identified any
change in our internal control over financial reporting that occurred during the fourth
quarter of the fiscal year ended December 31, 2006 that has materially affected, or is
reasonably likely to materially affect, the Companys internal control over financial
reporting.

Our management, including the chief
executive officer and chief financial officer, do not expect that our disclosure controls
or internal controls will prevent all errors and all fraud, but are designed to provide
reasonable assurance in achieving its objectives. A control system, no matter how well
conceived and operated, can provide only reasonable, not absolute, assurance that the
objectives of the control system are met. In addition, the design of a control system must
reflect the fact that there are resource constraints, and the benefits of controls must be
considered relative to their costs. These inherent limitations include the realities that
judgments in decision-making can be faulty, and that breakdowns can occur because of
simple error or mistake.

Individual persons perform multiple
tasks which normally would be allocated to separate persons and therefore extra diligence
must be exercised during the period these tasks are combined. Additionally, controls can
be circumvented by the individual acts of some persons, by collusion of two or more people
or by the override of the control. The design of any systems of controls is

---

- 35 -

based in part upon certain
assumptions about the likelihood of future events, and there can be no assurance that any
design will succeed in achieving its stated goals under all potential future conditions.
Because of these inherent limitations in a cost-effective control system, misstatements
due to error or fraud may occur and not be detected.

|ITEM 8B. |  | OTHER
INFORMATION
|-------- |  | -----------------

None.

---

---

- 36 -

# PART III

|ITEM 9. |  | DIRECTORS,
EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS, AND CORPORATE GOVERNANCE; COMPLIANCE WITH
SECTION 16(a) OF THE EXCHANGE ACT
|------- |  | --------------------------------------------------------------------------------------------------------------------------------------

# Directors, Executive
Officers, Promoters, and Control Persons

Our directors and executive officers
are listed in the table below. No person who is not an executive officer or director is
expected to make any significant contributions to Star.

|Name              |  | Age |  | Position                    |  | Period of Service                 | 
|----------------- |  | --- |  | --------------------------- |  | --------------------------------- | 
|                  |  |     |  |                             |  |                                   | 
|Patrick J. Kealy  |  | 64  |  | CEO and President           |  | Since November 16, 2006           | 
|Marcus Segal      |  | 35  |  | Chief Financial Officer and |  | Director since July 19, 2006; CFO | 
|                  |  |     |  | Director                    |  | since November 16, 2006           | 
|F. Bryson Farrill |  | 80  |  | Director                    |  | Since October 12, 2006            | 

Patrick J. Kealy possesses
over 30 years of experience in financial services, including investment management in
Russia. Immediately prior to joining us, Mr. Kealy served as Chairman of SwissFone
International, Ltd, an international long distance service provider, from December 2002 to
February 2006. He was also the Chairman of the Board of Telemetrix Inc., a publicly traded
company specializing in reselling cellular services, from April 15, 2004 through September
3, 2004. Mr. Kealy held various management positions in investment firms from 1965 to
2002. Mr. Kealy graduated from Notre Dame University in 1965 with a BBA Degree in Finance.

Marcus Segal has, in addition
to serving as our President and Chief Executive Officer from July 19, 2006 until November
15, 2006 and our Chief Financial Officer and a Director since November 16, 2006, Mr. Segal
has, since August 1, 2003, served as Vice President of Operations and Acting Chief
Financial Officer for Vindicia Inc., a technology company specializing in credit card
fraud prevention, and as Chief Financial Officer of Stargold Mines, Inc. since November 7,
2006. Prior to joining Vindicia, Mr. Segal served as Vice President of Operations at
EMusic.com from January 3, 2000until December 31, 2003, a leading Internet-based
music subscription service, where he was responsible for the Human Resources, Production,
Customer Service, Royalty Administration, and Business Affairs departments of eMusic
through that companys acquisition by Vivendi/Universals Universal Music Group
in 2002. Prior to his service at EMusic, Mr. Segal served as the Executive in Charge of
Production/Chief Operating Officer for The Documedia Group from December 1, 1996untilDecember 31, 1999 an award-winning documentary production company based
in Los Angeles. His projects included the 52-hour Sworn to Secrecy series for The History
Channel and The Last Days of WWII for the A&E Network, for which he was nominated for
an Emmy. Mr. Segal holds an MBA from Pepperdine Universitys Graziadio School of
Business, was named a National Journalism Center Fellow in 1996, and received a BA in
English Literature from the University of California at Santa Barbara.

Under our Bylaws, directors hold
office until their respective successors are elected and officers hold office until he or
she resigns or is removed or otherwise disqualified to serve, or his or her successor is
appointed and qualified. There are no family relationships among any of our directors or
executive officers.

---

- 37 -

# Compliance with Section
16(a) of the Exchange Act

Based solely upon a review of Forms
3, 4 and 5 furnished to Star, Star is aware of certain persons who during the fiscal year
ended December 31, 2006 were directors, officers, or beneficial owners of more than ten
percent of the common stock of Star who failed to file, on a timely basis, reports
required by Section 16(a) of the Securities Exchange Act of 1934, as amended, during such
fiscal year as follows: (i) Marcus Segal, our Chief Financial Officer and a Director,
filed his Form 3 after its due date; (ii) Marcus Segal did not file a Form 4 reflecting
his acquisition on November 8, 2006 of 100,000 shares of our common stock, although he did
file a Form 5 reflecting such transaction; (iii) Leonid Konstantinovich Nechayev, a former
Director, filed his Form 3 after its due date; (iv) F. Bryson Farrill did not file a Form
4 reflecting his acquisition on November 8, 2006 of 25,000 shares of our common stock,
although he did file a Form 5 reflecting the transaction; and Ruairidh Campbell, a former
officer and Director, did not file a Form 4 reflecting his transfer to us on October 5,
2006 of 3,250,000 shares of our common stock, although he did file a Form 5 reflecting the
transaction.

# Code of Ethics

Star has adopted a Code of Ethics
within the meaning of Item 406(b) of Regulation S-B of the Securities Exchange Act of
1934. The Code of Ethics applies to directors and senior officers, including our principal
executive officer, principal financial officer, controller, and persons performing similar
functions. Star has incorporated a copy of its Code of Ethics as Exhibit 14.1 into this
Form 10-KSB.

# Procedures for
Recommending Nominees to the Board of Directors

Our Board of Directors does not have a
formal policy with regard to the consideration of any director recommended by security
holders due to our relatively small size and the fact that we presently have no operating
activities.

# Audit Committee
Financial Expert

The board of directors has
established an audit committee, which presently consists only of F. Bryson Farrill, who is
our audit committee financial expert and who we have determined meets the definition of
independent as promulgated by the rules and regulations of NASDAQ.

|ITEM 10. |  | EXECUTIVE
COMPENSATION.
|-------- |  | -----------------------

# Summary Compensation
Table

During the fiscal year ended December
31, 2006, none of our executive officers earned compensation exceeding $100,000 per year.
The following table sets forth information concerning the compensation paid or earned
during the fiscal year ended December 31, 2006 for services rendered to us and our
subsidiaries in all capacities by all individuals who served as our principal executive
officer, or served in a similar capacity, during the year ended December 31, 2006,
regardless of compensation level:

---

- 38 -

|SUMMARY COMPENSATION TABLE 
|---------------------------
|                           
|Name and principal position
|                           
|Patrick J. Kealy (1)       
|                           
|Marcus Segal (3)           
|                           
|Nafi Onat (6)              

(1)
          Mr. Kealy has been serving as our President, Chief Executive Officer and a
          Director since November 18, 2006.

(2)
These shares were issued pursuant to the Employment
          Agreement dated November 16, 2006 between Star and Mr. Kealy. Pursuant to the rules of the
Securities and Exchange Commission relating to executive compensation, represents only the
dollar amount recognized for financial statement reporting purposes in 2006, computed in
accordance with Statement of Financial Accounting Standards No. 123(R), Share-Based
Compensation. The value of these
          shares was based on the average closing bid and asked prices for our common
          stock on November 16, 2006.

(3)
          Mr. Segal served as our President and Chief Executive Officer and Chief
          Financial Officer from July 19, 2006 until November 16, 2006 and has served
          solely in the capacity of our Chief Financial Officer since November 18, 2006.
          He has been serving as a Director since July 19, 2006.

(4)
          Fees for services as a director.

(5)
Pursuant to the rules of the
Securities and Exchange Commission relating to executive compensation, represents only the
dollar amount recognized for financial statement reporting purposes in 2006, computed in
accordance with Statement of Financial Accounting Standards No. 123(R), Share-Based
Compensation. The value of these shares was based on the average closing bid and asked
          prices for our common stock on November 8, 2006.

(6)
          Mr. Onat resigned from his position as Chief Executive Officer and a Director on
          July 19, 2006.

We have no pension, health, annuity,
bonus, insurance, equity incentive, non-equity incentive, stock options, profit sharing or
similar benefit plans. Except as noted in the footnotes to the Summary Compensation Table,
no equity incentive plan awards nor non-equity incentive plan compensation was granted or
earned during 2006. No stock options or stock appreciation rights were granted to any of
our directors or executive officers during the year ended December 31, 2006 and none are
outstanding.

# Outstanding Equity Awards

As of December 31, 2006, none of our
directors or executive officers held unexercised options, stock that had not vested, or
equity incentive plan awards.

---

- 39 -

# Employment Agreements

On November 16, 2006, we entered into
an Employment Agreement with Patrick J. Kealy, pursuant to which we agreed to employ Mr.
Kealy as our Chief Executive Officer and President for a one year term. The agreement
provides for Mr. Kealy to receive a salary of $150,000 during such one-year term. In
addition to his salary, Mr. Kealy received 300,000 shares of our common stock. The fair
market value of such shares was $828,000, based on the average closing bid and asked
prices for our common stock on November 16, 2006. The agreement provides that Mr.
Kealys employment could be terminated by us or Mr. Kealy for any reason or without
reason at any time within the first three month period of the term, in which event 250,000
of the shares issued to him were to be returned to our Company and be cancelled. Neither
party exercised that right.

# Compensation of Directors

There were no standard arrangements
pursuant to which our Directors were compensated in their capacity as such during the
fiscal year ended December 31, 2006. The following individuals who served as directors at
any time during this past fiscal year did not receive compensation for their services
rendered: Pierre Besuchet; Ruairidh Campbell; Georg Hochwimmer; Konstantin Leonid Nechaev;
and Nafi Onat.

The following table sets forth
certain information regarding the compensation paid to our Directors during the fiscal
year ended December 31, 2006:

|DIRECTOR COMPENSATION TABLE
|---------------------------
|                           
|Name                       
|                           
|F. Bryson Farrill          

(1)
Pursuant to the rules of the Securities and Exchange Commission relating to
executive compensation, represents the dollar amount recognized for financial statement reporting
          purposes in 2006, computed in accordance with Statement of Financial Accounting
          Standards No. 123(R), Share-Based Compensation, of 25,000 shares of
          common stock issued to Mr. Farrill on November 8, 2006, in consideration for
          services rendered by Mr. Farrill. The balance of the value of the shares will
be recognized in 2007.  The value of these shares was based on the average closing bid and asked
          prices of our common stock on November 8, 2006.

---

- 40 -

|ITEM 11. |  | SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
|-------- |  | --------------------------------------------------------------

The following table sets forth, as of
May 31, 2007, the number of shares of our common stock beneficially owned by (i) each
person or entity known to us to be the beneficial owner of more than 5% of the outstanding
common stock; (ii) each of our executive officers and directors; and (iii) all executive
officers and directors as a group. Information relating to beneficial ownership of common
stock by our principal shareholders and management is based upon information furnished by
each person using beneficial ownership concepts under the rules of the
Securities and Exchange Commission. Under these rules, a person is deemed to be a
beneficial owner of a security if that person has or shares voting power, which includes
the power to vote or direct the voting of the security, or investment power, which
includes the power to vote or direct the voting of the security. The person is also deemed
to be a beneficial owner of any security of which that person has a right to acquire
beneficial ownership within 60 days. Under Securities and Exchange Commission rules, more
than one person may be deemed to be a beneficial owner of the same securities, and a
person may be deemed to be a beneficial owner of securities as to which he or she may not
have any pecuniary beneficial interest. Except as noted below, each person has sole voting
and investment power. The percentages below are calculated based on 29,007,500
shares of our common stock issued and outstanding as of June 18, 2007. We do not have any
outstanding options, warrants or other securities exercisable for or convertible into
shares of our common stock.

|Name of Beneficial Owner             | Title of Class | Amount and Nature
of Beneficial
Ownership | Percent of Class
|------------------------------------ | -------------- | ----------------------------------------- | ----------------
|Patrick J. Kealy                     | Common         | 300,000                                   | *               
|                                    
|Marcus Segal                         | Common         | 100,000                                   | *               
|                                    
|F. Bryson Farrill                    | Common         | 25,000                                    | *               
|                                    
|All Executive Officers and Directors | Common         | 425,000                                   | 1.5%            
|as a Group (4 persons)               |                |                                           |                 
|                                    
|*less than one percent               |                |                                           |                 

# Equity Compensation Plans

We do not have any equity
compensation plans.

|ITEM 12. |  | CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
|-------- |  | -------------------------------------------------------------------------

# Related Transactions

On October 6, 2006, we entered into
an Assignment and Bill of Sale with Ruairidh Campbell, who at the time was as executive
officer and director until October 5, 2006. Pursuant to such assignment, we assigned to
Mr. Campbell all of our interests, consisting of a 15% working interest and 12% net
revenue interest, in and to the five oil and gas wells known as the Galvan Ranch Gas
Wells, located in Webb County, Texas. In consideration therefor, Mr. Campbell transferred
to us for  cancellation
 and return to our authorized but unissued common shares the 3,250,000 shares of our
common stock held by him.

# Director Independence

We believe that F. Bryson Farrill,
who is the sole director presently serving on the audit committee of our Board of
Directors, currently meets the definition of independent directors as
promulgated by the rules and regulations of NASDAQ. In determining that Mr. Farrill is
independent, our Board of Directors considered its decision in awarding Mr. Farrill 25,000
shares of our common stock in consideration for services rendered by him. See
Compensation of Directors in Item 10 of this Report.

---

- 41 -

|ITEM 13. |  | EXHIBITS
|-------- |  | --------

| | Exhibit No. |  | Description
| | ----------- |  | -----------

| | 3.1 |  | Articles
of Incorporation of Star  (incorporated by reference from the Form 10-SB filed with the
Securities and                                 Exchange Commission on February 3, 2000).
| | --- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 3.2 |  | Amended
 Articles of  Incorporation  of Star  (incorporated  by  reference  from the Form 10-KSB
filed with the                                 Securities and Exchange Commission on
March 11, 2003).
| | --- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 3.3 |  | Bylaws
 of Star  (incorporated  by  reference  from the Form  10-SB  filed  with the  Securities
 and  Exchange                                 Commission on February 3, 2000).
| | --- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 4.1 |  | Form
of the Company's 8% Secured Convertible Debenture due
                                2010  (incorporated  by  reference  to Exhibit  4.1 from
the Form 8-K filed with the  Securities  and  Exchange Commission  on February 14,
2007).
| | --- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 4.2 |  | Form
of Common Stock Purchase  Warrant  (incorporated  by reference to Exhibit 4.2 from the
Form 8-K filed with                                 the Securities and Exchange
Commission on February 14, 2007).
| | --- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 4.3 |  | Form
of Security  Agreement  dated as of February 9, 2007  (incorporated  by  reference to
Exhibit 4.3 from the                                 Form 8-K filed with the Securities
and Exchange Commission on February 14, 2007).
| | --- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 4.4 |  | Form
of Subsidiary  Guarantee dated as of February 9, 2007  (incorporated  by reference to
Exhibit 4.4 from the                                 Form 8-K filed with the Securities
and Exchange Commission on February 14, 2007).
| | --- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.1 |  | Assignment
and Bill of Sale between the Star and Monument  Resources,  Inc. in connection with that
acquisition                                 of the Galvan Ranch wells  interest
 (incorporated  by reference from the Form 10-QSB filed with the Securities
                                and Exchange Commission on July 17, 2003).
| | ---- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.2 |  | Stock
Purchase  Agreement,  dated October 6, 2006, among Star Energy  Corporation,  Volga-Neft
Limited Company,                                 and the  shareholders of Volga-Neft
 Limited Company  (incorporated  by reference to Exhibit 10.1 from the Form
                                8-K filed with the Securities and Exchange Commission on
October 6, 2006).
| | ---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.3 |  | Rescission
 Agreement  of Stock  Purchase  Agreement  dated  June 14,  2007,  among  Star  Energy
 Corporation,                                 Volga-Neft Limited Company, and the
shareholders of Volga-Neft Limited Company (included herein).
| | ---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.4 |  | Promissory
Note dated June 14, 2007 issued by Volga-Neft  Limited  Company in favor of Star Energy
 Corporation                                 (included herein).
| | ---- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.5 |  | Assignment,
 Assumption  and Release,  dated as of June 14,  2007,  among Star Energy  Corporation,
 Volga-Neft                                 Limited Company and JSC Capital Department
Stores (included herein).
| | ---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

- 42 -

| | 10.6 |  | Agreement,
 dated October 6, 2006, among Star Energy  Corporation,  Volga-Neft Limited Company,  and
IAB Island                                 Ventures  SA  (incorporated  by  reference  to
 Exhibit  10.2 from the Form 8-K filed with the  Securities  and
                                Exchange Commission on October 6, 2006).
| | ---- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.7 |  | Assignment
 and Bill of Sale,  dated October 6, 2006,  between Star Energy  Corporation  and
Ruairidh  Campbell                                 (incorporated by reference to Exhibit
10.3 from the Form 8-K filed with the Securities and Exchange  Commission
                                on October 6, 2006).
| | ---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.8 |  | Form
of Securities Purchase Agreement dated as of February 9, 2007
                                (incorporated by reference to Exhibit  10.1from the Form
8-K filed with the Securities and Exchange  Commission                                 on
February 14, 2007).
| | ---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.9 |  | Form
of  Registration  Rights  Agreement  dated as of February 9, 2007  (incorporated  by
 reference to Exhibit                                 10.2 from the Form 8-K filed with
the Securities and Exchange Commission on February 14, 2007).
| | ---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.10 |  | Form
of Lock-Up Agreement dated as of February 9,2007  (incorporated by reference to Exhibit
10.3 from the Form                                 8-K filed with the Securities and
Exchange Commission on February 14, 2007).
| | ----- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.11 |  | Agreement
 dated  December 14, 2006  between  Star Energy  Corporation  and Rodman & Renshaw
 (incorporated  by                                 reference to Exhibit 10.4 from the
Form 8-K filed with the Securities  and Exchange  Commission on February 14,
                                2007).
| | ----- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.12 |  | Employment
Agreement with Patrick J. Kealy (incorporated by reference to Exhibit 10.5 from the Form
8-K filed                                 with the Securities and Exchange Commission on
November 16, 2006).
| | ----- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 14.1 |  | Code
of Ethics adopted March 1, 2004  (incorporated by reference from the Form 10-KSB filed
with the Securities                                 and Exchange Commission on April 14,
2004).
| | ---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 31.1 |  | Certification
 of the Chief  Executive  Officer  pursuant to Rule 13a-14 of the  Securities and
Exchange Act of                                 1934 as amended, as adopted pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002 (included herein)
| | ---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 31.2 |  | Certification
 of the Chief  Financial  Officer  pursuant to Rule 13a-14 of the  Securities and
Exchange Act of                                 1934 as amended, as adopted pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002 (included herein)
| | ---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 32.1 |  | Certification
of the Chief Executive Officer pursuant to 18 U.S.C.  Section 1350 as adopted pursuant to
Section                                 906 of the Sarbanes-Oxley Act of 2002 (included
herein)
| | ---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 32.2 |  | Certification
of the Chief Financial Officer pursuant to 18 U.S.C.  Section 1350 as adopted pursuant to
Section                                 906 of the Sarbanes-Oxley Act of 2002 (included
herein)
| | ---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

- 43 -

|ITEM 14. |  | PRINCIPAL
ACCOUNTANT FEES AND SERVICES
|-------- |  | --------------------------------------

Principal Accountant

Jones Simkins, P.C. provided audit
services to Star in connection with its Annual Report on Form 10-KSB for the fiscal year
ended December 31, 2005. On November 16, 2006, Star dismissed Jones Simkins, P.C. as its
principal independent registered public accounting firm, and retained SF Partnership, LLP.
SF Partnership LLP provided audit services to Star in connection with its Annual Report on
Form 10-KSB for the fiscal year ended December 31, 2006.

Audit Fees

To date, we have paid $30,000 to SF
Partnership LLP on account of professional services rendered for the audit of the Companys
annual financial statements included in this Annual Report on Form 10-KSB.
The aggregate fees billed by Jones Simkins, P.C., our former independent
auditors, for professional services rendered for the audit of the Companys annual
financial statements included in our Annual Report on Form 10-KSB for the year ended
December 31, 2005 and the review of the unaudited financial statements included in
the Companys three Quarterly Reports on Form 10-QSB during the year ended December
31, 2006 through November 16, 2006 (the date of dismissal) was $7,520.

Audit-Related Fees

We incurred no fees for assurance and
related services by our independent registered public accounting firms that were
reasonably related to the performance of the audit or review of the Companys
financial statements for the years ended December 31, 2006 and 2005.

Tax Fees

SF Partnership LLP is not performing tax services for us for the year
ended December 31, 2006.  Jones Simkins, P.C. billed us $1,118 for tax services for the year ended December
31, 2005.

All Other Fees

We incurred no fees for all other
professional services rendered by our independent registered public accounting firms for
the years ended December 31, 2006 or 2005.

Policy on pre-approval of
audit and permissible non-audit services

Our Board of Directors unanimously
approved the fees paid to our independent registered public accounting firms for
audit-related, tax and other fees. Our Board of Directors pre-approves all non-audit
services to be performed by the auditor. None of the hours expended on the principal
accountants engagement to audit our financial statements for the most recent fiscal
year that were attributed to work performed by persons other than the principal
accountants full-time, permanent employees.

---

- 44 -

# SIGNATURES

In accordance with Section 13 or
15(d) of the Exchange Act, the registrant caused this registration statement to be signed
on its behalf by the undersigned, thereunto duly authorized, this 18th day of June, 2007.

| | STAR ENERGY CORPORATION
By: Patrick J. Kealy
          Patrick J. Kealy
          Chief Executive Officer and 
          President (Principal Executive 
           Officer)
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------

In accordance with the Exchange Act,
this report has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.

|                                    |                                              |              
|----------------------------------- | -------------------------------------------- | -------------
|Signature                           | Title                                        | Date         
|                                   
|Patrick J. Kealy
Patrick J. Kealy   | Principal Executive Officer and President    | June 18, 2007
|                                   
|Marcus Segal
Marcus Segal           | Chief Financial Officer                      | June 18, 2007
|                                    | (Principal Financial and Accounting Officer)
|                                    | and Director                                
|                                   
|F. Bryson Farrill
F. Bryson Farrill | Director                                     | June 18, 2007
|                                    |                                              |              

---

Exhibit Index

| | Exhibit No. |  | Description
| | ----------- |  | -----------

| | 3.1 |  | Articles
of Incorporation of Star  (incorporated by reference from the Form 10-SB filed with the
Securities and                                 Exchange Commission on February 3, 2000).
| | --- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 3.2 |  | Amended
 Articles of  Incorporation  of Star  (incorporated  by  reference  from the Form 10-KSB
filed with the                                 Securities and Exchange Commission on
March 11, 2003).
| | --- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 3.3 |  | Bylaws
 of Star  (incorporated  by  reference  from the Form  10-SB  filed  with the  Securities
 and  Exchange                                 Commission on February 3, 2000).
| | --- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 4.1 |  | Form
of the Company's 8% Secured Convertible Debenture due
                                2010  (incorporated  by  reference  to Exhibit  4.1 from
the Form 8-K filed with the  Securities  and  Exchange Commission  on February 14,
2007).
| | --- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 4.2 |  | Form
of Common Stock Purchase  Warrant  (incorporated  by reference to Exhibit 4.2 from the
Form 8-K filed with                                 the Securities and Exchange
Commission on February 14, 2007).
| | --- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 4.3 |  | Form
of Security  Agreement  dated as of February 9, 2007  (incorporated  by  reference to
Exhibit 4.3 from the                                 Form 8-K filed with the Securities
and Exchange Commission on February 14, 2007).
| | --- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 4.4 |  | Form
of Subsidiary  Guarantee dated as of February 9, 2007  (incorporated  by reference to
Exhibit 4.4 from the                                 Form 8-K filed with the Securities
and Exchange Commission on February 14, 2007).
| | --- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.1 |  | Assignment
and Bill of Sale between the Star and Monument  Resources,  Inc. in connection with that
acquisition                                 of the Galvan Ranch wells  interest
 (incorporated  by reference from the Form 10-QSB filed with the Securities
                                and Exchange Commission on July 17, 2003).
| | ---- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.2 |  | Stock
Purchase  Agreement,  dated October 6, 2006, among Star Energy  Corporation,  Volga-Neft
Limited Company,                                 and the  shareholders of Volga-Neft
 Limited Company  (incorporated  by reference to Exhibit 10.1 from the Form
                                8-K filed with the Securities and Exchange Commission on
October 6, 2006).
| | ---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.3 |  | Rescission
 Agreement  of Stock  Purchase  Agreement  dated  June 14,  2007,  among  Star  Energy
 Corporation,                                 Volga-Neft Limited Company, and the
shareholders of Volga-Neft Limited Company (included herein).
| | ---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.4 |  | Promissory
Note dated June 14, 2007 issued by Volga-Neft  Limited  Company in favor of Star Energy
 Corporation                                 (included herein).
| | ---- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.5 |  | Assignment,
 Assumption  and Release,  dated as of June 14,  2007,  among Star Energy  Corporation,
 Volga-Neft                                 Limited Company and JSC Capital Department
Stores (included herein).
| | ---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

| | 10.6 |  | Agreement,
 dated October 6, 2006, among Star Energy  Corporation,  Volga-Neft Limited Company,  and
IAB Island                                 Ventures  SA  (incorporated  by  reference  to
 Exhibit  10.2 from the Form 8-K filed with the  Securities  and
                                Exchange Commission on October 6, 2006).
| | ---- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.7 |  | Assignment
 and Bill of Sale,  dated October 6, 2006,  between Star Energy  Corporation  and
Ruairidh  Campbell                                 (incorporated by reference to Exhibit
10.3 from the Form 8-K filed with the Securities and Exchange  Commission
                                on October 6, 2006).
| | ---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.8 |  | Form
of Securities Purchase Agreement dated as of February 9, 2007
                                (incorporated by reference to Exhibit  10.1from the Form
8-K filed with the Securities and Exchange  Commission                                 on
February 14, 2007).
| | ---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.9 |  | Form
of  Registration  Rights  Agreement  dated as of February 9, 2007  (incorporated  by
 reference to Exhibit                                 10.2 from the Form 8-K filed with
the Securities and Exchange Commission on February 14, 2007).
| | ---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.10 |  | Form
of Lock-Up Agreement dated as of February 9,2007  (incorporated by reference to Exhibit
10.3 from the Form                                 8-K filed with the Securities and
Exchange Commission on February 14, 2007).
| | ----- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.11 |  | Agreement
 dated  December 14, 2006  between  Star Energy  Corporation  and Rodman & Renshaw
 (incorporated  by                                 reference to Exhibit 10.4 from the
Form 8-K filed with the Securities  and Exchange  Commission on February 14,
                                2007).
| | ----- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.12 |  | Employment
Agreement with Patrick J. Kealy (incorporated by reference to Exhibit 10.5 from the Form
8-K filed                                 with the Securities and Exchange Commission on
November 16, 2006).
| | ----- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 14.1 |  | Code
of Ethics adopted March 1, 2004  (incorporated by reference from the Form 10-KSB filed
with the Securities                                 and Exchange Commission on April 14,
2004).
| | ---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 31.1 |  | Certification
 of the Chief  Executive  Officer  pursuant to Rule 13a-14 of the  Securities and
Exchange Act of                                 1934 as amended, as adopted pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002 (included herein)
| | ---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 31.2 |  | Certification
 of the Chief  Financial  Officer  pursuant to Rule 13a-14 of the  Securities and
Exchange Act of                                 1934 as amended, as adopted pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002 (included herein)
| | ---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 32.1 |  | Certification
of the Chief Executive Officer pursuant to 18 U.S.C.  Section 1350 as adopted pursuant to
Section                                 906 of the Sarbanes-Oxley Act of 2002 (included
herein)
| | ---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 32.2 |  | Certification
of the Chief Financial Officer pursuant to 18 U.S.C.  Section 1350 as adopted pursuant to
Section                                 906 of the Sarbanes-Oxley Act of 2002 (included
herein)
| | ---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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