----

|   | o | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|--------|---|------------------------------------------------------------------------------------------------|

|   | x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|--------|---|--------------------------------------------------------------------------------------|

|   | o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|--------|---|------------------------------------------------------------------------------------------|

|   | o | SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|--------|---|---------------------------------------------------------------------------------------------|

----

----

----

----

----

----

| Title of Each Class |   | Name of each exchange on which registered |
|------------------------------------|--------|-------------------------------------------------------------------------|
| None                               |   | None                                                                    |

| Common Shares, no par value per share |
|---------------------------------------|
| (Title of Class)            |

| None                       |
|----------------------------|
| (Title of Class) |

| U.S. GAAP x |   | International Financial reporting Standards as issued |   | Other o |
|------------------|--------|--------------------------------------------------------------------------------|--------|---------|
|             |   | by the International Accounting Standards Board o     |   |    |

----

|      |                                                                         |   | Page   |
|-----------|------------------------------------------------------------------------------|--------|--------|
|      | EXPLANATORY NOTE                                                             |   | 1      |
|      | INTRODUCTION                                                                 |   | 2      |
| PART I    |                                                                         |   | 3      |
| ITEM 1.   | IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS                        |   | 3      |
| ITEM 2.   | OFFER STATISTICS AND EXPECTED TIMETABLE                                      |   | 3      |
| ITEM 3.   | KEY INFORMATION                                                              |   | 3      |
| ITEM 4.   | INFORMATION ON THE COMPANY                                                   |   | 14     |
| ITEM 4A.  | UNRESOLVED STAFF COMMENTS                                                    |   | 29     |
| ITEM 5.   | OPERATING AND FINANCIAL REVIEW AND PROSPECTS OVERVIEW                        |   | 29     |
| ITEM 6.   | DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES                                   |   | 40     |
| ITEM 7.   | MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS                            |   | 52     |
| ITEM 8.   | FINANCIAL INFORMATION                                                        |   | 52     |
| ITEM 9.   | THE OFFER AND LISTING                                                        |   | 54     |
| ITEM 10.  | ADDITIONAL INFORMATION                                                       |   | 55     |
| ITEM 11.  | QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK                    |   | 68     |
| ITEM 12.  | DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES                       |   | 68     |
|      |                                                                         |   |   |
| PART II   |                                                                         |   | 69     |
| ITEM 13.  | DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES                              |   | 69     |
| ITEM 14.  | MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS |   | 69     |
| ITEM 15.  | CONTROLS AND PROCEDURES                                                      |   | 69     |
| ITEM 16.  | [RESERVED]                                                                   |   | 70     |
| ITEM 16A. | AUDIT COMMITTEE FINANCIAL EXPERT                                             |   | 70     |
| ITEM 16B. | CODE OF ETHICS                                                               |   | 70     |
| ITEM 16C. | PRINCIPAL ACCOUNTANT FEES AND SERVICES                                       |   | 71     |
| ITEM 16D. | EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES                   |   | 71     |
| ITEM 16E. | PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS       |   | 71     |
| ITEM 16F. | CHANGES IN REGISTRANT’S CERTIFYING ACCOUNTANT                          |   | 71     |
| ITEM 16G. | CORPORATE GOVERNANCE                                                         |   | 71     |
|      |                                                                         |   |   |
| PART III  |                                                                         |   | 72     |
| ITEM 17.  | FINANCIAL STATEMENTS                                                         |   | 72     |
| ITEM 18.  | FINANCIAL STATEMENTS                                                         |   | 72     |
| ITEM 19.  | EXHIBITS                                                                     |   | 72     |

----

|   | ● | Introduction, to remove a reference to unproven properties;                                                                                                                                              |
|--------|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |    |                                                                                                                                                                                                     |
|   | ● | Item 3D – Risk Factors, to change the number of authorized shares of preferred stock from unlimited to 100 million;                                                                                |
|   |    |                                                                                                                                                                                                     |
|   | ● | Item 4A – History and Developments of the Company, to provide expanded disclosure of Company activities;                                                                                           |
|   |    |                                                                                                                                                                                                     |
|   | ● | Item 4B – Business Overview, to remove a reference to unproven properties and provide expanded disclosure of Company activities;                                                                   |
|   |    |                                                                                                                                                                                                     |
|   | ● | Item 5A – Operating Results, to provide disclosure regarding impairment of oil and gas assets;                                                                                                     |
|   |    |                                                                                                                                                                                                     |
|   | ● | Item 5B – Liquidity and Capital Resources, to provide expanded disclosure regarding prior financings and liquidity events;                                                                         |
|   |    |                                                                                                                                                                                                     |
|   | ● | Item 6B – Compensation, to revise certain disclosures regarding executive compensation and additional information on director compensation;                                                        |
|   |    |                                                                                                                                                                                                     |
|   | ● | Item 6C – Board Practices, to provide expanded disclosure on our audit committee and the qualifications of each member;                                                                            |
|   |    |                                                                                                                                                                                                     |
|   | ● | Item 6E – Share Ownership, to provide disclosure on outstanding options owned by executive officers;                                                                                               |
|   |    |                                                                                                                                                                                                     |
|   | ● | Item 8A.7 – Legal Proceedings, to update disclosures regarding the cease trading orders that were issued in Canada; and                                                                            |
|   |    |                                                                                                                                                                                                     |
|   | ● | Notes to the Financial Statements, to revise the supplemental information on oil and gas operations (unaudited) regarding accounting for reserve information and to make other minor conforming changes. |

----

----

| A. | Selected Financial Data |
|----|-------------------------|

| Selected Financial Data                                       |
|--------------------------------------------------------------------|
|                                                               | Year Ended April 30, |
| 2011                                                               | 2010 | 2009 | 2008 | 2007 |
| Revenues                                                           | $1,582,176 | $1,581,223 | $135,190 | $644,731 | $231,261 |
| Expenses                                                           | $31,291,562 | $9,531,582 | $60,082,461 | $40,734,966 | $15,899,246 |
| Net Loss                                                           | ($29,709,386) | ($7,950,359) | ($59,947,271) | ($40,090,235) | ($15,667,985) |
| Foreign Exchange Translation                                       | ($283,771) | $4,984,026 | ($13,832,144) | $8,505,150 | $354,583 |
| Total Comprehensive Loss                                           | ($29,993,157) | ($2,966,333) | ($73,779,415) | ($31,585,085) | ($15,313,402) |
| Net Income (Loss) per Share                                        | ($2.22) | ($0.60) | ($4.60) | ($5.05) | ($7.09) |
| Weighted Average Number of Common Shares                           | 13,387,166 | 13,325,545 | 13,035,892 | 7,941,379 | 2,210,213 |
| Total Assets                                                       | $20,818,512 | $31,596,571 | $30,502,369 | $88,185,360 | $87,987,736 |
| Long-term liabilities                                              | $20,061,550 | $1,852,792 | $858,286 | $46,022,853 | $1,900,432 |
| Total Liabilities                                                  | $23,650,925 | $2,842,857 | $952,720 | $49,807,354 | $3,072,949 |
| Accumulated Retained Earnings (Deficit) from the Development Stage | ($135,474,141) | ($105,144,948) | ($96,975,794) | ($37,472,384) | $2,551,300 |
| Capital Stock(1)                                                   | $79,016,425 | $80,717,433 | $78,828,533 | $57,217,824 | $36,625,531 |
| Stockholders (Deficit) Equity                                      | $(2,832,413) | $28,753,714 | $29,549,649 | $38,378,006 | $84,914,787 |

| (1) | Includes share capital, preferred shares and exchange shares. |
|-----|---------------------------------------------------------------|

----

| B. | Capitalization and Indebtedness |
|----|---------------------------------|

| C. | Reasons for the Offer and Use of Proceeds |
|----|-------------------------------------------|

| D. | Risk Factors |
|----|--------------|

----

----

----

----

|   | • | worldwide and domestic supplies of oil and gas;                                                                      |
|--------|---------|----------------------------------------------------------------------------------------------------------------------|
|   | • | actions taken by foreign oil and gas producing nations;                                                              |
|   | • | political conditions and events (including instability or armed conflict) in oil-producing or gas-producing regions; |
|   | • | the level of global and domestic oil and gas inventories;                                                            |

|   | • | the price and level of foreign imports;                  |
|--------|---------|----------------------------------------------------------|
|   | • | the level of consumer demand;                            |
|   | • | the price and availability of alternative fuels;         |
|   | • | the availability of pipeline or other takeaway capacity; |

|   | • | weather conditions;                                          |
|--------|---------|--------------------------------------------------------------|
|   | • | domestic and foreign governmental regulations and taxes; and |
|   | • | the overall worldwide and domestic economic environment.     |

|   | • | adversely affect our financial condition, liquidity, ability to finance planned capital expenditures and results of operations; |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------|
|   | • | cause us to delay or postpone some of our capital projects;                                                                     |
|   | • | reduce our revenues, operating income and cash flow; and                                                                        |
|   | • | limit our access to sources of capital.                                                                                         |

----

----

----

----

|   | • | dilution caused by our issuance of additional shares of Common Stock and other forms of equity securities, which we expect to make in connection with future capital financings to fund our operations and growth, to attract and retain valuable personnel and in connection with future strategic partnerships with other companies; |
|--------|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | quarterly variations in our revenues and operating expenses; |
|--------|---------|--------------------------------------------------------------|

|   | • | changes in the valuation of similarly situated companies, both in our industry and in other industries; |
|--------|---------|---------------------------------------------------------------------------------------------------------|

|   | • | changes in analysts’ estimates affecting our company, our competitors and/or our industry; |
|--------|---------|--------------------------------------------------------------------------------------------------|

|   | • | changes in the accounting methods used in or otherwise affecting our industry; |
|--------|---------|--------------------------------------------------------------------------------|

|   | • | additions and departures of key personnel; |
|--------|---------|--------------------------------------------|

|   | • | announcements of technological innovations or new products available to the personal protective equipment industry; |
|--------|---------|---------------------------------------------------------------------------------------------------------------------|

|   | • | fluctuations in interest rates and the availability of capital in the capital markets; and |
|--------|---------|--------------------------------------------------------------------------------------------|

|   | • | significant sales of our common stock. |
|--------|---------|----------------------------------------|

|   | • | that a broker or dealer approve a person's account for transactions in penny stocks; and                                                                           |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | • | the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased. |

|   | • | obtain financial information and investment experience objectives of the person; and                                                                                                                                                                  |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | • | make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks. |

----

|   | • | sets forth the basis on which the broker or dealer made the suitability determination; and                 |
|--------|---------|------------------------------------------------------------------------------------------------------------|
|   | • | that the broker or dealer received a signed, written agreement from the investor prior to the transaction. |

----

| Item 4. | Information on the Company |
|---------|----------------------------|

| A. | History and Development of the Company |
|----|----------------------------------------|

----

| Item 4. | Information on the Company - continued |
|---------|----------------------------------------|

----

| Item 4. | Information on the Company - continued |
|---------|----------------------------------------|

|   | · | the sale of a 10 percent working interest in our existing land and production projects on 15,313 acres of our oil and gas leases located in Missouri and Kansas (the "Deerfield Area"), which area includes our Grassy Creek and Marmaton River projects, to Mega Partners 1, LLC ("MP 1"), an affiliate of the ICO Fund for $2.0 million. In connection with the sale of the working interest, we granted MP 1 various options, including: (i) the option to acquire an additional 10 percent working interest in future development within the Deerfield Area; (ii) the option to acquire up to a 20 percent proportionate interest in any of our properties outside of the Deerfield Area by paying a proportionate 133 percent share of our costs-to-date in respect of such property until the later of the full redemption or conversion of the Series A or Series B preferred shares (issued pursuant to the arrangement with the ICO Fund) and August 27, 2011; and (iii) the option to participate with our company in any future oil and gas property acquisitions for a proportionate 20 percent share of the cost of any such acquisition until the later of the full redemption or conversion of the Series A or Series B preferred shares (as defined herein) and August 27, 2011; and |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | an offering to investors (led by the ICO Fund) of 22,000 Series A convertible preferred shares ("Series A Preferred Shares"), each with a stated value of US$100, for gross proceeds of $2.2 million.  The Series A Preferred Shares are convertible into common shares at US$0.70 per common share and have a quarterly cumulative dividend equal to either 5 percent, if paid in cash (15 percent upon the occurrence of certain events of default) or 7.5 percent, if paid in additional Series A Preferred Shares.  In connection with the Series A Preferred Share offering, our company also issued to the subscribers thereunder: (i) 1,540,000 common stock purchase warrants, each entitling the holder thereof to purchase an additional common share at US$2.50 per share until August 28, 2014 ("Preferred A Warrants"); and (ii) additional investment rights consisting of the right to purchase 20,000 Series B convertible preferred shares ("Series B Preferred Shares"), each with a stated value of US$100, convertible into common shares at US$1.00 per common share attached to which would be 1,000,000 common share purchase warrants ("Preferred B Warrants"), each entitling the holder thereof to purchase an additional common share at US$3.50 per common share for a period of five years from the date of issuance. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Item 4. | Information on the Company - continued |
|---------|----------------------------------------|

|   | · | Issuance of Senior I Notes for proceeds of $2.5 million, maturing on January 30, 2012 with an annual coupon rate of 8% cash or 12% in additional Senior I Notes at the Company’s option until January 30, 2011 and at the holder’s option thereafter.  Senior I Notes are redeemable in cash at any time or convertible into common shares at $0.50 per common share at the Company’s option if the underlying shares are freely tradable and common shares trade at or above $2.50 per share for the previous 20 consecutive trading days and the daily average trading volume has been in excess of $750,000 per day for the same period.  In the event of redemption before the end of the term, there will be a 5% premium due on the investment amount. Note holders may elect to receive the redemption in common shares at the conversion price.  Senior I Note holders received one warrant for each $0.05 principal amount of the Senior I Notes for 5,000,000 warrants (“Senior I Warrants”).  Senior I Warrants are exercisable at $0.20 per share until July 29, 2013. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Conversion of 22,000 Series A Preferred Shares plus accumulated dividends of $301,069 into $2,501,069 of Junior Notes maturing on July 30, 2013 with an annual coupon rate of 5% cash or 7.5% in additional Junior Notes, at the Company’s option and at the holder’s option thereafter.  Junior Notes are redeemable in cash at any time or convertible into common shares at $0.50 per common share at the Company’s option provided: i) production from the Missouri Deerfield project is 15,000 barrels of oil in a 30 day period; ii) the common shares have traded at or above $2.50 per share for the preceding 20 consecutive trading days; and iii) the daily average dollar trading volume has been in excess of US $750,000 per day for the same 20 day period. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Extension of the expiry date on the outstanding option to acquire Series B Preferred Shares to May 24, 2011 (further extended to June 7, 2011). |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Re-acquisition of a 10% working interest in the Company’s Missouri Marmaton River and Grassy Creek projects from MP1 in exchange for a 2.75% gross overriding royalty interest on the projects, effective July 1, 2010, as noted above. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Item 4. | Information on the Company - continued |
|---------|----------------------------------------|

|   | · | MP1 retains the option to acquire up to an additional 10% interest in future projects within the Deerfield Area, on a project by project basis, by paying up to a US $300,000 equalization payment per project and thereafter its proportionate share of all future development and operating costs in respect of such project, including a proportionate share of facility costs. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | For a period which is the latter of either the Series A or B Preferred Shares (or the underlying investment rights to buy Series B Preferred Shares) being outstanding or August 28, 2011, MP1 had the option to acquire up to a 20% proportionate interest in any of the Company’s properties outside of the Deerfield Area by paying a proportionate 133% of the Company’s costs-to-date in respect of such property and the option to participate with the Company in any future oil and gas property acquisitions for a proportionate 20% share of any such acquisition. This option expired. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Issuance of Senior II Notes for proceeds of $4.6 million, maturing 18 months after closing, with an annual coupon rate of 8% cash or 12% in additional Senior II Notes at the Company’s option for the first six months after closing and at the holder’s option thereafter.  Senior II Notes are redeemable in cash at any time or convertible into common shares at $0.20 per common share at the Company’s option if the underlying shares are freely tradable and common shares trade at or above $2.50 for the previous 20 consecutive trading days and the daily average trading volume has been in excess of US $750,000 per day for the same period.  Senior II Note holders received one warrant for each $0.50 principal amount of the Senior Notes for 9,200,000 warrants ("Senior II Warrants").  Senior II Warrants are exercisable at $0.25 per share for a period of 36 months after closing. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Item 4. | Information on the Company - continued |
|---------|----------------------------------------|

| B. | Business Overview |
|----|-------------------|

----

| Item 4. | Information on the Company - continued |
|---------|----------------------------------------|

----

| Item 4. | Information on the Company - continued |
|---------|----------------------------------------|

| Project Goal                                                                                                                                                      | Estimated Cost (millions) |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------|
|                                                                                                                                                              |                      |
| Capital identified in the GLJ Missouri Property Report - Total Proved Reserves to drill, complete and tie in new patterns of wells in both existing projects      |    $2.284  |
|                                                                                                                                                              |                      |
| To re-complete existing well patterns in Marmaton River Phase II and Grassy Creek Phase I                                                                         |  $0.45               |
|                                                                                                                                                              |                      |
| To install observation wells one per existing pattern                                                                                                             |  $0.125              |
|                                                                                                                                                              |                      |
| To cover operating expenses through initial pattern heating or re-heating.  This also allows for the time lag between production and oil sales receipts |    $2.0    |
|                                                                                                                                                              |                      |
| General and administrative expenses                                                                                                                               | $2.4                      |
|                                                                                                                                                              |                      |
| Contingency of 20%                                                                                                                                                | $1.4                      |
|                                                                                                                                                              |                      |
| Total                                                                                                                                                             | $8.659                    |

| Cost                         |   | Missouri |       |   | Kentucky |   |       | Montana |   |   | Kansas   |   |   | Texas  |   |   | Other  |   |   | Total  |   |
|------------------------------|--------|----------|------------|--------|----------|--------|------------|---------|--------|--------|----------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Balance, April 30, 2010      |   | $        | 24,936,309 |   |     | $      | 3,215,682  |    |   | $      | 686,209  |   |   | $      | 94,613 |   |   | $      | -      |   |   | $ | 1,354,996 |   |   | $ | 30,287,809 |   |
| Additions                    |   |     | 1,516,465  |   |     |   | 102,364    |    |   |   | -        |   |   |   | 4,745  |   |   |   | -      |   |   |   | - |   |   |   | 1,623,574 |   |
| Depletion                    |   |     | (720,740   | )      |     |   | -          |    |   |   | -        |   |   |   | -      |   |   |   | -      |   |   |   | - |   |   |   | (720,740 | ) |
| Impairment                   |   |     | (9,066,590 | )      |     |   | (3,179,174 | )       |   |   | (602,913 | )      |   |   | -      |   |   |   | -      |   |   |   | - |   |   |   | (12,848,677 | ) |
| Foreign currency translation |   |     | (301,444   | )      |     |   | (38,872    | )       |   |   | (8,296   | )      |   |   | (1,144 | )      |   |   | -      |   |   |   | (16,380 | ) |   |   | (366,136 | ) |
| Balance, April 30, 2011      |   | $        | 16,364,000 |   |     | $      | 100,000    |    |   | $      | 75,000   |   |   | $      | 98,214 |   |   | $      | -      |   |   | $ | 1,338,616 |   |   | $ | 17,975,830 |   |

----

| Item 4. | Information on the Company - continued |
|---------|----------------------------------------|

| Cost                         |   | Missouri |       |   | Kentucky |   |      | Montana |   |   | Kansas    |   |   | Texas  |   |   | Other  |   |     | Total  |   |
|------------------------------|--------|----------|------------|--------|----------|--------|-----------|---------|--------|--------|-----------|--------|--------|--------|--------|--------|--------|--------|----------|--------|--------|
| Balance, April 30, 2009      |   | $        | 22,462,582 |   |     | $      | 2,695,991 |    |   | $      | 1,273,963 |   |   | $      | 83,803 |   |   | $      | 251,460  |   |   | $ | 1,529,053 |   |   | $ | 28,296,852 |   |
| Additions                    |   |     | 714,821    |   |     |   | 49,223    |    |   |   | 15,413    |   |   |   | -      |   |   |   | -        |   |   |   | 5,557 |   |   |   | 785,014 |   |
| Recoveries and transfers     |   |     | 38,311     |   |     |   | -         |    |   |   | -         |   |   |   | (3,200 | )      |   |   | (323     | )      |   |   | (4,719 | ) |   |   | 30,069 |   |
| Disposition                  |   |     | (2,011,529 | )      |     |   | -         |    |   |   | -         |   |   |   | -      |   |   |   | -        |   |   |   | (379,548 | ) |   |   | (2,391,077 | ) |
| Depletion                    |   |     | (95,815    | )      |     |   | -         |    |   |   | -         |   |   |   | -      |   |   |   | -        |   |   |   | - |   |   |   | (95,815 | ) |
| Impairment                   |   |     | -          |   |     |   | -         |    |   |   | (816,696  | )      |   |   | -      |   |   |   | (290,237 | )      |   |   | (55,612 | ) |   |   | (1,162,545 | ) |
| Foreign currency translation |   |     | 3,827,939  |   |     |   | 470,468   |    |   |   | 213,529   |   |   |   | 14,010 |   |   |   | 39,100   |   |   |   | 260,265 |   |   |   | 4,825,311 |   |
| Balance, April 30, 2010      |   | $        | 24,936,309 |   |     | $      | 3,215,682 |    |   | $      | 686,209   |   |   | $      | 94,613 |   |   | $      | -        |   |   | $ | 1,354,996 |   |   | $ | 30,287,809 |   |

| Cost                         |   | Missouri |       |   | Kentucky |   |        | Montana |   |   | Kansas      |   |   | Texas  |       |   | Other  |   |     | Total  |   |
|------------------------------|--------|----------|------------|--------|----------|--------|-------------|---------|--------|--------|-------------|--------|--------|--------|------------|--------|--------|--------|----------|--------|--------|
| Balance, April 30, 2008      |   | $        | 15,426,924 |   |     | $      | 43,241,600  |    |   | $      | 17,464,748  |   |   | $      | 3,912,739  |   |   | $      | 297,870  |   |   | $ | 1,567,335 |   |   | $ | 81,911,216 |   |
| Additions                    |   |     | 9,842,427  |   |     |   | 1,729,644   |    |   |   | 1,351,879   |   |   |   | 289,679    |   |   |   | 578,319  |   |   |   | 916,508 |   |   |   | 14,708,456 |   |
| Impairment                   |   |     | -          |   |     |   | (36,981,914 | )       |   |   | (15,396,845 | )      |   |   | (3,646,484 | )      |   |   | (578,319 | )      |   |   | (865,237 | ) |   |   | (57,468,799 | ) |
| Foreign currency translation |   |     | (2,806,769 | )      |     |   | (5,293,339  | )       |   |   | (2,145,819  | )      |   |   | (472,131   | )      |   |   | (46,410  | )      |   |   | (89,553 | ) |   |   | (10,854,021 | ) |
| Balance, April 30, 2009      |   | $        | 22,462,582 |   |     | $      | 2,695,991   |    |   | $      | 1,273,963   |   |   | $      | 83,803     |   |   | $      | 251,460  |   |   | $ | 1,529,053 |   |   | $ | 28,296,852 |   |

----

| Item 4. | Information on the Company - continued |
|---------|----------------------------------------|

|   | · | SOR performance may not reach the full cycle range of 7:1 to 9:1 as expected which would in turn lead to operating costs higher than forecast; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The Company has identified two critical project design improvements that will be included in future development. Those are the installation of low-cost observation wells, and cased-through- reservoir well construction. These improvements are not expected to have a significant impact on future development costs. However, Grassy Creek Phase I and Marmaton River Phase II projects must be retrofitted at a combined cost of approximately $575,000;\ |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Grassy Creek Phase I has produced to date approximately 15% of its proved reserves estimate and has remaining recoverable reserves of 172 Mbbl. The initial time to warm the formation to full production capacity was estimated at 9 months, Grassy Creek Phase I may require additional warming time of up to 3 months. That would result in increased cost to recover the remaining reserves of up to $1.50 per bbl. for Grassy Creek Phase I; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Operating costs, as noted above, have been significantly higher than forecast during operation of the pilot projects, and while Gravis expects full cycle operating costs to be in range of $29.00 per bbl to $32.00 as forecast, there can be no guarantee that operating costs will not vary either lower or higher than forecast; and |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | In September, 2011, Gravis shut in all operations in Missouri, having been unable to secure sufficient funding on commercially acceptable terms to follow through to commercially successful exploitation of its Missouri reserves, including funds to implement the planned modifications to wells in Grassy Creek Phase I, and Marmaton River Phase II, for operating costs to bring the projects to full production rates, for contingencies, and for Corporate purposes, Gravis will need secure financing of approximately $8.7 million in order to re-commence operations in both Grassy Creek and Marmaton River projects. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Item 4. | Information on the Company - continued |
|---------|----------------------------------------|

----

| Item 4. | Information on the Company - continued |
|---------|----------------------------------------|

----

| Item 4. | Information on the Company - continued |
|---------|----------------------------------------|

| C. | Organizational Structure |
|----|--------------------------|

| Subsidiary                                                             | Jurisdiction ofIncorporation  | Incorporation /Acquisition Date  |
|-----------------------------------------------------------------------------|------------------------------------|---------------------------------------|
| MegaWest Energy Kentucky Corp. (formerly Kentucky Reserves, LLC)            | Ohio                          | April 2, 2007                    |
| MegaWest Energy Missouri Corp. (formerly Deerfield Energy LLC)         | Delaware                      | April 5, 2007                    |
| MegaWest Energy Kansas Corp. (formerly Deerfield Energy Kansas Corp.)  | Delaware                      | April 5, 2007                    |
| MegaWest Energy Texas Corp. (formerly Trinity Sands Energy LLC)        | Delaware                      | April 25, 2007                   |
| MegaWest Energy Montana Corp.                                          | Delaware                      | October 19, 2007                 |

| D. | Property, Plants and Equipment |
|----|--------------------------------|

|         | Producing      | Non-Producing  |
|--------------|----------------|----------------|
|         | April 30, 2011 | April 30, 2010 | April 30, 2011 | April 30, 2010 |
|         | Gross          | Net            | Gross | Net | Gross | Net | Gross | Net |
| Kansas       |           |           |   |   | 33 | 33.0 | 33 | 33.0 |
| Missouri (1) | 116            | 116            | 111 | 99.9 | 1 | 1 | - | - |
| Kentucky     |           |           |   |   | 5 | 1.9 | 5 | 1.9 |
| Montana      |           |           |   |   | - | - | - | - |
| Texas        |           |           |   |   | 5 | 1.75 | 5 | 1.75 |
| Total        | 116            | 116            | 111 | 99.9 | 44 | 37.65 | 43 | 36.65 |

| Project Areas |   | April 30, 2011 |   |   | April 30, 2010 |   |
|---------------|--------|----------------|--------|--------|----------------|--------|
|          |   | Gross          |   |   | Net            |   |   | Gross |   |   | Net |   |
| Kansas (1)    |   |           | 385    |   |           |   | 385 |   |   |   | 385 |   |   |   | 385 |   |
| Missouri      |   |           | 38,119 |   |           |   | 37,470 |   |   |   | 38,119 |   |   |   | 36,598 |   |
| Kentucky (1)  |   |           | 29,147 |   |           |   | 10,930 |   |   |   | 29,147 |   |   |   | 10,930 |   |
| Texas (1)     |   |           | 19,938 |   |           |   | 9,969 |   |   |   | 29,516 |   |   |   | 11,751 |   |
| Montana (1)   |   |           | 3,982  |   |           |   | 2,019 |   |   |   | 15,688 |   |   |   | 8,673 |   |
| Total         |   |           | 91,571 |   |           |   | 60,773 |   |   |   | 112,855 |   |   |   | 68,337 |   |

| (1) | We have discontinued our plans for any further expenditure on these properties as a result of poor drilling results in prior years and a lack of resources. See Operational and Project Review above. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Item 4. | Information on the Company - continued |
|---------|----------------------------------------|

| Oil (MBbls)                          |   | 2011   |   |   | 2010   |   |   | 2009   |   |
|--------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|                                 |   |   |   |   |   |   |   |   |   |
| Proved reserves as at May 1          |   |   | 445    |   |   |   | 79     |   |   |   | 45 |   |
| Extensions and discoveries           |   |   | 46     |   |   |   | -      |   |   |   | 43 |   |
| Dispositions                         |   |   | -      |   |   |   | (3     | )      |   |   | - |   |
| Production                           |   |   | (28    | )      |   |   | (32    | )      |   |   | (9 | ) |
| Revisions of prior estimates         |   |   | -      |   |   |   | 401    |   |   |   | - |   |
| Total Proved reserves as at April 30 |   |   | 463    |   |   |   | 445    |   |   |   | 79 |   |
|                                 |   |   |   |   |   |   |   |   |   |   |   |   |
| Oil (MBbls)                          |   |   | 2011   |   |   |   | 2010   |   |   |   | 2009 |   |
|                                 |   |   |   |   |   |   |   |   |   |   |   |   |
| Proved developed producing           |   |   | 191    |   |   |   | 191    |   |   |   | - |   |
| Non-producing                        |   |   | -      |   |   |   | -      |   |   |   | 34 |   |
| Proved undeveloped                   |   |   | 272    |   |   |   | 254    |   |   |   | 45 |   |
| Total Proved reserves as at April 30 |   |   | 463    |   |   |   | 445    |   |   |   | 79 |   |

| Capitalized Costs Related to Oil and Gas Assets |   | 2011   |        |   | 2010   |   |        | 2009   |   |
|-------------------------------------------------|--------|--------|-------------|--------|--------|--------|-------------|--------|--------|
|                                            |   |   |        |   |   |   |        |   |   |
| Proved properties                               |   | $      | 10,474,051  |   |   | $      | 9,630,780   |   |   | $ | 2,958,979 |   |
| Unproved properties                             |   |   | 105,123,129 |   |   |   | 104,692,582 |   |   |   | 107,996,621 |   |
|                                            |   |   | 115,597,180 |   |   |   | 114,323,362 |   |   |   | 110,955,600 |   |
| Less: accumulated impairment                    |   |   | (98,143,411 | )      |   |   | (85,294,734 | )      |   |   | (84,187,801 | ) |
| Less: accumulated depletion                     |   |   | (816,555    | )      |   |   | (95,815     | )      |   |   | - |   |
|                                            |   | $      | 16,637,214  |   |   | $      | 28,932,813  |   |   | $ | 26,767,799 |   |

----

| Item 4. | Information on the Company - continued |
|---------|----------------------------------------|

| Costs incurred in Oil and Gas Activities: |   | 2011   |      |   | 2010   |   |    | 2009   |   |
|-------------------------------------------|--------|--------|-----------|--------|--------|--------|---------|--------|--------|
|                                      |   |   |      |   |   |   |    |   |   |
| Development                               |   | $      | 1,623,574 |   |   | $      | 779,457 |   |   | $ | 13,131,400 |   |
| Exploration                               |   |   | -         |   |   |   | -       |   |   |   | - |   |
|                                      |   | $      | 1,623,574 |   |   | $      | 779,457 |   |   | $ | 13,131,400 |   |

|   | • | Future production will include production not only from proved properties, but may also include production from probable and possible reserves; |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Future production of oil and natural gas from proved properties may differ from reserves estimated; |
|--------|---------|-----------------------------------------------------------------------------------------------------|

|   | • | Future production rates may vary from those estimated; |
|--------|---------|--------------------------------------------------------|

|   | • | Future rather than average first-day-of-the-month prices during the previous 12-month period and costs as at the balance sheet date will apply; |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Economic factors such as changes to interest rates, income tax rates, regulatory and fiscal environments and operating conditions cannot be determined with certainty; |
|--------|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Future estimated income taxes do not take into account the effects of future exploration expenditures; and |
|--------|---------|------------------------------------------------------------------------------------------------------------|

|   | • | Future development and asset retirement obligations may differ from those estimated. |
|--------|---------|--------------------------------------------------------------------------------------|

| Future cash flows relating to proved reserves: |   | 2011   |       |   | 2010   |   |        | 2009   |   |
|------------------------------------------------|--------|--------|------------|--------|--------|--------|-------------|--------|--------|
|                                           |   |   |       |   |   |   |        |   |   |
| Future cash inflows                            |   | $      | 26,338,000 |   |   | $      | 26,291,000  |   |   | $ | 3,425,000 |   |
| Future operating costs                         |   |   | (9,686,000 | )      |   |   | (10,672,000 | )      |   |   | (2,004,000 | ) |
| Future development costs                       |   |   | (3,345,000 | )      |   |   | (3,488,000  | )      |   |   | (889,000 | ) |
| Future asset retirement costs                  |   |   | (141,000   | )      |   |   | (139,000    | )      |   |   | (60,000 | ) |
| Future income taxes                            |   |   | -          |   |   |   | -           |   |   |   | - |   |
| Future net cash flows                          |   |   | 13,166,000 |   |   |   | 11,992,000  |   |   |   | 472,000 |   |
| 10% discount factor                            |   |   | (3,225,000 | )      |   |   | (3,286,000  | )      |   |   | (139,000 | ) |
| Standardized measure                           |   | $      | 9,941,000  |   |   | $      | 8,706,000   |   |   | $ | 333,000 |   |

| Reconciliation of future cash flows relating to proved reserves: |   | 2011   |       |   | 2010   |   |       | 2009   |   |
|------------------------------------------------------------------|--------|--------|------------|--------|--------|--------|------------|--------|--------|
| Undiscounted value as at May 1                                   |   | $      | 11,992,000 |   |   | $      | 472,000    |   |   | $ | 256,000 |   |
| Extensions and discoveries                                       |   |   | 1,239,600  |   |   |   | -          |   |   |   | 1,075,000 |   |
| Dispositions                                                     |   |   | -          |   |   |   | (17,900    | )      |   |   | - |   |
| Production                                                       |   |   | (775,700   | )      |   |   | (481,100   | )      |   |   | (44,900 | ) |
| Revisions of prior volume estimates                              |   |   | -          |   |   |   | 10,806,300 |   |   |   | - |   |
| Revisions of pricing                                             |   |   | 710,100    |   |   |   | 1,212,700  |   |   |   | (814,100 | ) |
| Undiscounted value as at April 30                                |   |   | 13,166,000 |   |   |   | 11,992,000 |   |   |   | 472,000 |   |
| 10% discount factor                                              |   |   | (3,225,000 | )      |   |   | (3,286,000 | )      |   |   | (139,000 | ) |
| Standardized measure                                             |   | $      | 9,941,000  |   |   | $      | 8,706,000  |   |   | $ | 333,000 |   |

----

| Item 4A.  | Unresolved Staff Comments |
|---------------------|---------------------------|

| Item 5.  | Operating and Financial Review and Prospects |
|--------------------|----------------------------------------------|

| A. | Operating Results |
|----|-------------------|

----

| Item 5. | Operating and Financial Review and Prospects - continued |
|---------|----------------------------------------------------------|

|   | • | estimates of production and recovery rates, which vary depending on the method of extraction used and the characteristics of the reservoir and resource estimates; |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | estimates of operating costs, which vary with equipment and facility efficiency, inflation; |
|--------|---------|---------------------------------------------------------------------------------------------|

|   | • | estimates of the proceeds of the disposal of oil and gas assets and |
|--------|---------|---------------------------------------------------------------------|

|   | • | estimates of future capital costs, which vary with inflation, equipment and facility performance. |
|--------|---------|---------------------------------------------------------------------------------------------------|

----

| Item 5. | Operating and Financial Review and Prospects - continued |
|---------|----------------------------------------------------------|

|                                                  |   | Years ended April 30 |        |
|-------------------------------------------------------|--------|----------------------|-------------|
|                                                  |   | 2011                 |        |   | 2010 |   |
| Revenue and other income                              |   |                 |        |   |   |   |
| Oil sales                                             |   | $                    | 1,565,963   |   |   | $ | 1,575,150 |   |
| Interest income                                       |   |                 | 16,213      |   |   |   | 6,073 |   |
|                                                  |   |                 | 1,582,176   |   |   |   | 1,581,223 |   |
|                                                  |   |                 |        |   |   |   |   |   |
| Expenses                                              |   |                 |        |   |   |   |   |   |
| Operating                                             |   |                 | 3,470,746   |   |   |   | 3,955,084 |   |
| Impairment of oil and gas assets                      |   |                 | 12,848,677  |   |   |   | 1,162,545 |   |
| General and administrative                            |   |                 | 3,307,060   |   |   |   | 3,193,449 |   |
| Depreciation, depletion and accretion                 |   |                 | 844,160     |   |   |   | 293,113 |   |
| Interest and accretion                                |   |                 | 1,512,443   |   |   |   | - |   |
| Foreign exchange loss (gain)                          |   |                 | (86,959     | ) |   |   | 98,225 |   |
| Change in fair value of derivatives                   |   |                 | 9,395,435   |   |   |   | 829,166 |   |
|                                                  |   |                 | 31,291,562  |   |   |   | 9,531,582 |   |
| Net loss                                              |   | $                    | (29,709,386 | ) |   | $ | (7,950,359 | ) |
| Net loss per share                                    |   | $                    | (2.22       | ) |   | $ | (0.60 | ) |
| Weighted average number of shares - basic and diluted |   |                 | 13,387,166  |   |   |   | 13,325,545 |   |

----

| Item 5. | Operating and Financial Review and Prospects - continued |
|---------|----------------------------------------------------------|

|   | • | the lack of funds available to the Company at year-end and into fiscal 2012;                   |
|--------|---------|-----------------------------------------------------------------------------------------------------|
|   | • | the limited progress in attracting additional funds from March 2011 until September 2011; and  |
|   | • | the reduction in remaining lease term of a significant part of the acreage.                         |

|                             |   | Year ended April 30 |      |
|----------------------------------|--------|---------------------|-----------|
|                             |   | 2011                |      |   | 2010 |   |
| Stock-based compensation:        |   |                |      |   |   |   |
|  Stock options              |   | $                   | 575,835   |   |   | $ | 500,293 |   |
| Compensation warrants            |   |                | 152,010   |   |   |   | - |   |
| Consulting warrants              |   |                | 166,810   |   |   |   | - |   |
|  Shares issued for services |   |                | -         |   |   |   | 7,638 |   |
|  Less: capitalized portion  |   |                | (9,495    | ) |   |   | (50,846 | ) |
|                             |   |                | 885,160   |   |   |   | 457,085 |   |
| Salaries and benefits            |   |                | 1,063,706 |   |   |   | 1,401,257 |   |
| Professional fees                |   |                | 1,104,290 |   |   |   | 460,101 |   |
| Investor relations               |   |                | 64,818    |   |   |   | 45,177 |   |
| Office and administrative        |   |                | 325,259   |   |   |   | 938,534 |   |
| Information technology           |   |                | 44,364    |   |   |   | 52,754 |   |
| Less: capitalized portion        |   |                | (180,537  | ) |   |   | (161,459 | ) |
|                             |   |                | 2,421,900 |   |   |   | 2,736,364 |   |
|                             |   | $                   | 3,307,060 |   |   | $ | 3,193,449 |   |

|   | • | Stock-based compensation expense is higher in 2011 due to the granting of: |
|--------|---------|----------------------------------------------------------------------------|

|   | • | 500,000 stock options in January 2011 and 802,000 stock options in April 2011; |
|--------|---------|--------------------------------------------------------------------------------|

|   | • | 480,000 compensation warrants in April 2011; and |
|--------|---------|--------------------------------------------------|

|   | • | 720,000 consulting warrants in July 2010 and 2,000,000 consulting warrants in December 2010; |
|--------|---------|----------------------------------------------------------------------------------------------|

|   | • | Salaries and benefit costs increased in the fourth quarter of 2011 due to the hiring of a new president in January 2011. Annual salaries and benefits costs are lower in 2011 due to reduced staffing levels for the majority of the year; |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Professional fees, consisting of legal, audit, accounting and tax advisory fees, increased due to services related to financial reporting and regulatory compliance and the Company’s dispute with its landlord (see Contingency and Contractual Obligation section); |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Investor relations expenses increased in 2011 related to the Company’s efforts to raise investor awareness of the Company; |
|--------|---------|----------------------------------------------------------------------------------------------------------------------------------|

|   | • | Office and administrative costs decreased due to management’s efforts to reduce costs, the closing of a field office in Missouri and no Calgary office lease payments made since December 2009 (see Contingency and Contractual Obligation section); and |
|--------|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Information technology costs decreased in 2011 due to a reduction in the outsourcing of technology services. |
|--------|---------|--------------------------------------------------------------------------------------------------------------|

----

| Item 5. | Operating and Financial Review and Prospects - continued |
|---------|----------------------------------------------------------|

|                         |   | Preferred AWarrants |      |   | Preferred BOption |   |      | Conversionfeature derivative |   |   | Seniorwarrants |   |   | Consultingwarrants |      |   | Total  |   |
|------------------------------|--------|---------------------|-----------|--------|-------------------|--------|-----------|------------------------------|--------|--------|----------------|--------|--------|--------------------|-----------|--------|--------|--------|
| Balance, April 30, 2010      |   | $                   | 740,269   |   |              | $      | 590,640   |                         |   | $      | -              |   |   | $                  | -         |   |   | $      | - |   |   | $ | 1,330,909 |   |
| Fair value on date of issue  |   |                | -         |   |              |   | -         |                         |   |   | 1,883,200      |   |   |               | 1,808,070 |   |   |   | 166,810 |   |   |   | 3,858,080 |   |
| Conversion of Senior I Notes |   |                | -         |   |              |   | -         |                         |   |   | (84,530        | )      |   |               | -         |   |   |   | - |   |   |   | (84,530 | ) |
| Change in fair value         |   |                | 2,479,431 |   |              |   | 4,531,654 |                         |   |   | 1,070,960      |   |   |               | 988,820   |   |   |   | 324,570 |   |   |   | 9,395,435 |   |
| Balance, April 30, 2011      |   | $                   | 3,219,700 |   |              | $      | 5,122,294 |                         |   | $      | 2,869,630      |   |   | $                  | 2,796,890 |   |   | $      | 491,380 |   |   | $ | 14,499,894 |   |

|                                                  |   | Years ended April 30 |       |
|-------------------------------------------------------|--------|----------------------|------------|
|                                                  |   | 2010                 |       |   | 2009 |   |
| Revenue and other income                              |   |                 |       |   |   |   |
| Oil sales                                             |   | $                    | 1,575,150  |   |   | $ | - |   |
| Interest income                                       |   |                 | 6,073      |   |   |   | 135.190 |   |
|                                                  |   |                 | 1,581,223  |   |   |   | 135,190 |   |
|                                                  |   |                 |       |   |   |   |   |   |
| Expenses                                              |   |                 |       |   |   |   |   |   |
| Operating                                             |   |                 | 3,955,084  |   |   |   | - |   |
| Impairment of oil and gas assets                      |   |                 | 1,162,545  |   |   |   | 57,468,799 |   |
| General and administrative                            |   |                 | 3,193,449  |   |   |   | 4,046,550 |   |
| Depreciation, depletion and accretion                 |   |                 | 293,113    |   |   |   | 127,884 |   |
| Interest and accretion                                |   |                 | -          |   |   |   | 12,479 |   |
| Foreign exchange loss (gain)                          |   |                 | 98,225     |   |   |   | (1,573,251 | ) |
| Change in fair value of derivatives                   |   |                 | 829,166    |   |   |   | - |   |
|                                                  |   |                 | 9,531,582  |   |   |   | 60,082,461 |   |
| Net loss                                              |   | $                    | (7,950,359 | ) |   | $ | (59,947,271 | ) |
| Net loss per share                                    |   | $                    | (0.60      | ) |   | $ | (4.60 | ) |
| Weighted average number of shares - basic and diluted |   |                 | 13,325,545 |   |   |   | 13,035,892 |   |

----

| Item 5. | Operating and Financial Review and Prospects - continued |
|---------|----------------------------------------------------------|

|                             |   | Year ended April 30 |      |
|----------------------------------|--------|---------------------|-----------|
|                             |   | 2010                |      |   | 2009 |   |
| Stock-based compensation:        |   |                |      |   |   |   |
|  Stock options              |   | $                   | 500,293   |   |   | $ | 784,887 |   |
| Compensation warrants            |   |                | -         |   |   |   |   |   |
| Consulting warrants              |   |                | -         |   |   |   |   |   |
|  Shares issued for services |   |                | 7,638     |   |   |   | 222,533 |   |
|  Less: capitalized portion  |   |                | (50,846   | ) |   |   | (472,486 | ) |
|                             |   |                | 457,085   |   |   |   | 534,934 |   |
| Salaries and benefits            |   |                | 1,401,257 |   |   |   | 2,576,423 |   |
| Professional fees                |   |                | 460,101   |   |   |   | 439,370 |   |
| Investor relations               |   |                | 45,177    |   |   |   | 188,908 |   |
| Office and administrative        |   |                | 938,534   |   |   |   | 1,136,719 |   |
| Information technology           |   |                | 52,754    |   |   |   | 213,229 |   |
| Less: capitalized portion        |   |                | (161,459  | ) |   |   | (1,043,033 | ) |
|                             |   |                | 2,736,364 |   |   |   | 3,511,616 |   |
|                             |   | $                   | 3,193,449 |   |   | $ | 4,046,550 |   |

|   | • | Stock-based compensation expense of $457,085 was recorded for the fiscal year ended April 30, 2010 (2009 - $534,934). The overall decrease in stock-based compensation from 2010 to 2009 is primarily due to the vesting of certain options granted in prior years for which stock-based compensation was recorded in 2009 but is no longer recognized in 2010.                                                                                                                                                                                                                                                                                         |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | • | Salary and benefit costs of $1,401,257 were recorded for the fiscal year ended April 30, 2010 (2009 - $2,576,423). The decrease in salaries and benefit costs in fiscal 2010 is due to a change in the mix of the employees with less senior staff in 2010 than in 2009.                                                                                                                                                                                                                                                                                                                                                                                |
|   | • | Professional fees totaled $460,101 for the fiscal year ended April 30, 2010 (2009 - $439,370), which consist of legal, audit, accounting and tax advisory fees. The decrease in the professional fees in fiscal 2010 is primarily due to the reduced audit and tax consulting fees compared to fiscal 2009.                                                                                                                                                                                                                                                                                                                                             |
|   | • | Investor relations expenses of $45,177 were incurred for the fiscal year ended April 30, 2010 (2009 - $188,908) in an effort to raise investor awareness. The decrease in investor relations costs for fiscal year 2010 is due to fewer investor relations consultants engaged during the period compared to fiscal 2009.                                                                                                                                                                                                                                                                                                                               |
|   | • | Office and administrative costs totaled $938,534 for the fiscal year ended April 30, 2010 (2009 - $1,136,719) and are primarily comprised of office rent and supplies, license and maintenance costs, insurance, telephone and internet, travel and miscellaneous costs. The decrease is primarily due to a decrease in lease payments in fiscal 2010 due to re-negotiated lease terms on the Calgary office combined with no lease payments made for that office since December 2009 (See Item 8A. “Financial Information - Financial Statement and Other Information - Legal Proceedings”) and the closing of a field office in Missouri. |
|   | • | Information technology costs totaled $52,754 for the fiscal year ended April 30, 2010 (2009 - $213,229) and mainly consist of part-time information technology consulting, software license and maintenance fees. The decrease in information and technology costs is due to fewer information technology consultants engaged during fiscal 2010 compared to fiscal 2009.                                                                                                                                                                                                                                                                               |

----

| Item 5. | Operating and Financial Review and Prospects - continued |
|---------|----------------------------------------------------------|

|                         |   | Preferred AWarrants |    |   | Preferred BOption |   |    | Conversion featurederivative |   |   | Seniorwarrants |   |   | Consultingwarrants |   |   | Total  |   |
|------------------------------|--------|---------------------|---------|--------|-------------------|--------|---------|------------------------------|--------|--------|----------------|--------|--------|--------------------|--------|--------|--------|--------|
| Balance, April 30, 2009      |   | $                   | -       |   |              | $      | -       |                         |   | $      | -              |   |   | $                  | -      |   |   | $      | - |   |   | $ | - |   |
| Fair value on date of issue  |   |                | 323,564 |   |              |   | 138,671 |                         |   |   | -              |   |   |               | -      |   |   |   | - |   |   |   | 462,235 |   |
| Foreign currency translation |   |                | 25,479  |   |              |   | 14,029  |                         |   |   | -              |   |   |               | -      |   |   |   | - |   |   |   | 39,508 |   |
| Change in fair value         |   |                | 391,226 |   |              |   | 437,940 |                         |   |   | -              |   |   |               | -      |   |   |   | - |   |   |   | 829,166 |   |
| Balance, April 30, 2010      |   | $                   | 740,269 |   |              | $      | 590,640 |                         |   | $      | -              |   |   | $                  | -      |   |   | $      | - |   |   | $ | 1,330,909 |   |

| B. | Liquidity and Capital Resources |
|----|---------------------------------|

----

| Item 5. | Operating and Financial Review and Prospects - continued |
|---------|----------------------------------------------------------|

|   | · | Issuance of Senior I Notes for proceeds of $2.5 million, maturing on January 30, 2012 with an annual coupon rate of 8% cash or 12% in additional Senior I Notes at the Company's option until January 30, 2011 and at the holder's option thereafter. Senior I Notes are redeemable in cash at any time or convertible into common shares at US$0.50 per common share at the Company's option if the underlying shares are freely tradable and common shares trade at or above $2.50 per share for the previous 20 consecutive trading days and the daily average trading volume has been in excess of $750,000 per day for the same period. In the event of redemption before the end of the term, there will be a 5% premium due on the investment amount. Note holders may elect to receive the redemption in common shares at the conversion price. Senior I Note holders received one warrant for each $0.05 principal amount of the Senior I Notes for 5,000,000 warrants ("Senior I Warrants"). Senior I Warrants are exercisable at $0.50 per share until July 29, 2013. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Conversion of 22,000 Preferred A Shares plus accumulated dividends of $301,069 into $2,501,069 of Junior Notes maturing on July 30, 2013 with an annual coupon rate of 5% cash or 7.5% in additional Junior Notes, at the Company's option and at the holder's option thereafter. Junior notes are redeemable in cash at any time or convertible into common shares at $0.50 per common share at the Company's option provided: i) production from the Missouri Deerfield project is 15,000 barrels of oil in a 30 day period; ii) the common shares have traded at or above US $2.50 per share for the preceding 20 consecutive trading days; and iii) the daily average dollar trading volume has been in excess of US $750,000 per day for the same 20 day period. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Extension of the expiry date on the outstanding option to acquire Series В Preferred Shares to May 24, 2011 (further extended to June 7, 2011). |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Re-acquisition of a 10% working interest in the Company's Missouri Marmaton River and Grassy Creek projects from MP1 in exchange for a 2.75% gross overriding royalty interest on the projects, effective July 1, 2010, as noted above. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Item 5. | Operating and Financial Review and Prospects - continued |
|---------|----------------------------------------------------------|

|   | · | MP1 retains the option to acquire up to an additional 10% interest in future projects within the Deerfield Area, on a project by project basis, by paying up to a US $300,000 equalization payment per project and thereafter its proportionate share of all future development and operating costs in respect of such project, including a proportionate share of facility costs. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | For a period which is the latter of either the Series A or В Preferred Shares (or the underlying investment rights to buy Series В Preferred Shares) being outstanding or August 28, 2011, МР1 had the option to acquire up to a 20% proportionate interest in any of the Company's properties outside of the Deerfield Area by paying a proportionate 133% of the Company's costs-to-date in respect of such property and the option to participate with the Company in any future oil and gas property acquisitions for а proportionate 20% share of any such acquisition. This option expired. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Issuance of Senior II Notes for proceeds of $4.6 million, maturing 18 months after closing, with an annual coupon rate of 8% cash or 12% in additional Senior II Notes at the Company's option for the first six months after closing and at the holder's option thereafter.  Senior II notes are redeemable in cash at any time or convertible into common shares at $0.20 per common share at the Company's option if the underlying shares are freely tradable and common shares trade at or above $2.50 for the previous 20 consecutive trading days and the daily average trading volume has been in excess of US $750,000 per day for the same period. Senior II Note holders received one warrant for each $0.50 principal amount of the Senior Notes for 9,200,000 warrants (Senior II Warrants). Senior H Warrants are exercisable at $0.25 per share for a period of 36 months after closing. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Item 5. | Operating and Financial Review and Prospects - continued |
|---------|----------------------------------------------------------|

| As at                                       | September 30, 2011 (12) | April 30, 2011 | April 30, 2010 |
|---------------------------------------------|-------------------------|----------------|----------------|
|                                        |                    |           |           |
| Common shares (1)                           | 14,078,947              | 14,078,947     | 13,328,947     |
| Preferred A Shares (2)                      | –                 | –        | 3,459,295      |
| Preferred A Warrants (3) (11)               | 19,250,000              | 19,250,000     | 1,540,000      |
| Preferred B Shares (4)  (11)      | 8,799,500               | 10,000,000     | 2,000,000      |
| Preferred B Warrants (4) (11)               | 15,399,125              | 17,500,000     | 1,000,000      |
| Senior I Notes (5) (11)                     | 11,750,000              | 11,750,000     | –        |
| Senior I Warrants (5) (11)                  | 12,500,000              | 12,500,000     | –        |
| Senior II Notes (6) (11)                    | 23,000,000              | 23,000,000     |           |
| Senior II Warrants (6) (11)                 | 9,200,000               | 9,200,000      |           |
| Junior Notes (2) (11)                       | 12,505,340              | 12,505,340     | –        |
| Consulting Warrants (7)                     | 2,720,000               | 2,720,000      | –        |
| Stock Options (1)  (9)            | 1,404,300               | 1,404,300      | 1,069,800      |
| Compensation Warrants (1)  (9)    | 480,000                 | 480,000        |           |
| Accrued Senior I Notes (interest) (10)(11)  | 1,620,657               | 1,105,068      | –        |
| Accrued Senior II Notes (interest) (10)(11) | 1,862,466               | 705,534        |           |
| Accrued Junior Notes (interest) (10)(11)    | 1,097,215               | 704,068        | –        |
|                                        | 135,667,550             | 136,903,257    | 22,398,042     |

----

|   |   |
|--------|--------|

| C. | Research and Development |
|----|--------------------------|

| D. | Trend Information |
|----|-------------------|

| E. | Off-Balance Sheet Arrangements |
|----|--------------------------------|

----

| Item 5. | Operating and Financial Review and Prospects - continued |
|---------|----------------------------------------------------------|

| F. | Tabular Disclosure of Contractual Obligations |
|----|-----------------------------------------------|

| Contractual Obligations |   | Payments due by period |   |
|-------------------------|--------|------------------------|--------|
|                    |   | Total                  |   |   | Less than 1 year |   |   | 1-3 years |   |   | 3-5 years |   |   | More than 5 years |   |
| Lease payments (1)      |   |                   | -      |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Total                   |   | $                      | -      |   |   | $ | - |   |   |   | - |   |   |   | - |   |   |   | - |   |

|   | (1) | We are in a dispute with our landlord over the termination of our office lease. We contend that the lease has terminated in accordance with its terms and accordingly, we are of the opinion that no amounts are due under the office lease. See Item 8A. “Financial Information - Financial Statement and Other Information - Legal Proceedings” |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Item 6. | Directors, Senior Management and Employees |
|---------|--------------------------------------------|

| A. | Directors, Senior Management and Employees |
|----|--------------------------------------------|

| Name and Age              | Position                                                                 |
|---------------------------|--------------------------------------------------------------------------|
| Tim L. Morrison (38) | Chief Executive Officer, Secretary andChairman of the Board of Directors |
| George Orr (i) (50)       | Director                                                                 |
| M. Elden Schorn (i) (72)  | Director                                                                 |
| Fred Zeidman (i) (65)     | Director                                                                 |
| Jeffrey Freedman (64)     | Chief Financial Officer                                                  |
| Pat McCarron (60)         | Vice President Operations                                                |
| E. Wayne Sampson (60)     | Vice President Land                                                      |

| (i) Member of the Audit Committee |
|-----------------------------------|

----

| Item 6. | Directors, Senior Management and Employees - continued |
|---------|--------------------------------------------------------|

----

| Item 6. | Directors, Senior Management and Employees - continued |
|---------|--------------------------------------------------------|

| B.  | Compensation |
|----------|--------------|

| Name and Principal Position                                               | Fiscal Year Ended  April 30 | Salary($)             | Share-Based Awards ($) | Option-Based Awards($) (1)(11) | Non-Equity Incentive Plan Compensation | Pension Value($) | All Other Compen-sation($) | Total Compen-sation($) |
|---------------------------------------------------------------------------|---------------------------------------|-----------------------|------------------------|--------------------------------|----------------------------------------|------------------|----------------------------|------------------------|
| Annual Incentive Plans($)                                                 | Long-Term Incentive Plans($)          |
| Tim MorrisonCEO, Secretary and Director                                   | 201120102009                          | 61,359NANA            | ---                    | 128,560(10)--                  | ---                                    | ---              | ---                        | ---                    | 189,919-- |
| George OrrDirector(4)                                                     | 201120102009                          | NANA56,965            | ---                    | 72,818 (9)--                   | ---                                    | ---              | ---                        | ---                    | 72,818-56,965 |
| Pat McCarronVice President, Operations                                    | 201120102009                          | 185,040185,040138,780 | ---                    | 35,618(9)--                    | ---                                    | ---              | ---                        | --$100,000             | 185,040185,040238,780 |
| E. Wayne Sampson (5)Former Vice President, Land                           | 201120102009                          | 176,500176,496176,496 | ---                    | 28,494(9)--                    | ---                                    | ---              | ---                        | ---                    | 204,994176,496176,496 |
| Kelly Sledz(6)Former Vice President, Finance                              | 201120102009                          | NA100,832110,550      | ---                    | ---                            | ---                                    | ---              | ---                        | ---                    | -100,832110,550 |
| George T. Stapleton, IIFormer Chief Executive Officer and Director(7)     | 201120102009                          | NA189,231236,899      | ---                    | 72,818(9)--                    | ---                                    | ---              | ---                        | ---                    | 72,818189,231236,899 |
| Kelly D. Kerr (8)Former VP Finance  and CFO                     | 201120102009                          | 108,281100,832-       | ---                    | -38,940-                       | ---                                    | ---              | ---                        | ---                    | 108,281139,772- |
| R. William ThorntonFormer President, Chief Executive Officer and Director | 201120102009                          | 49,359250,080250,000  | ---                    | ---                            | ---                                    | ---              | ---                        | ---                    | 49,359250,080250,000 |

| (1) | "Options" includes all options, share purchase warrants and rights granted by our company as compensation for employment services or office.  Pursuant to the common share consolidation on June 20, 2011 all Options are shown on a consolidated basis. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | "SAR" or "stock appreciation right" means a right granted by our company, as compensation for employment services or office, to receive cash or an issue or transfer of securities based wholly or in part on changes in the trading price of our company's publicly traded securities. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | "LTIP" or "long term incentive plan" means a plan that provides compensation intended to motivate performance over a period greater than one fiscal year, but does not include Option or SAR plans or plans for compensation through shares or units that are subject to restrictions on resale. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4) | Mr. Orr was our Chief Financial Officer from December 21, 2006 to October 27, 2008, and from February 14, 2011 to June 30, 2011.  Mr. Orr’s personal company was paid CND $22,400 for his services during the year ended April 30, 2011. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (5) | Mr. Sampson resigned from our Company effective May 31, 2011. |
|-----|---------------------------------------------------------------|

| (6) | Mr. Sledz resigned from our company effective January 23, 2009. |
|-----|-----------------------------------------------------------------|

----

| Item 6. | Directors, Senior Management and Employees - continued |
|---------|--------------------------------------------------------|

| (7) | Mr. Stapleton resigned as CEO on January 4, 2011 and as a director on April 29, 2011. |
|-----|---------------------------------------------------------------------------------------|

| (8) | Mr. Kerr joined our company on October 14, 2009 and resigned November 30, 2010. |
|-----|---------------------------------------------------------------------------------|

| (9) | These Options were issued on April 5, 2011 at $0.50 and expire April 5, 2014.  In conjunction with the issuance of these Options, Mr. Orr forfeited 30,000 previously issued Options at $1.50, Mr. Stapleton forfeited 30,000 previously issued Options, Mr. McCarron forfeited 90,000 previously issued Options at $1.50 and Mr. Sampson 90,000 previously issued Options at $1.50.  At the time of issuance Mr. Stapleton was not an officer. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (10) | Mr. Morrison options are at $0.50 and expire as to 500,000 on January 1, 2015 and 100,000 on April 5, 2014.  Mr. Morrison resigned from his position on January 23, 2012. |
|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (11) | Based on the grant date fair value of the applicable awards. The fair value of the options granted is obtained by multiplying the number of options granted by their value established according to the Black, Scholes pricing model. This value is the same as the fair value established in accordance with generally accepted accounting principles.  The following assumptions were used for options granted in 2011: expected volatility – 130%; risk-free rate – 1.41%; forfeiture rate – 15%; expected life – 3.4 years; dividend yield – 0%.  The following assumptions were used for options granted in 2010: expected volatility – 214%; risk-free rate – 2.57%; forfeiture rate – 10%; expected life – 3 years; dividend yield – 0%. |
|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Item 6. | Directors, Senior Management and Employees - continued |
|---------|--------------------------------------------------------|

| Name           | Fees Earned ($) | Share-Based Awards ($) | Option-Based Awards (#)(1) | Non-Equity Incentive Plan Compensation ($) | Pension Value ($) | All Other Compensation ($) | Total ($) |
|----------------|-----------------|------------------------|----------------------------|--------------------------------------------|-------------------|----------------------------|-----------|
| Brian J. Evans | Nil             | Nil                    | 80,00(2)                   | Nil                                        | Nil               | Nil                        | Nil       |
| Fred Zeidman   | Nil             | Nil                    | 150,000(2)                 | Nil                                        | Nil               | Nil                        | Nil       |
| Neil McCrank   | Nil             | Nil                    | 80,000(2)                  | Nil                                        | Nil               | Nil                        | Nil       |
| Elden Schorn   | Nil             | Nil                    | 100,000(2)                 | Nil                                        | Nil               | Nil                        | Nil       |

| 1) | "Options" includes all options, share purchase warrants and rights granted by our company as compensation for employment services or office.  Pursuant to the common share consolidation on June 20, 2011 all Options are shown on a consolidated basis. |
|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2) | These options have an exercise price of $0.50 and expire on April 5, 2014.  In conjunction with the issuance of these Options Mr. Evans forfeited 80,000 previously issued options, Mr. Zeidman forfeited 50,000 previously issued options and Mr. McCrank forfeited 80,000 previously issued options |
|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|         | Option-Based Awards                                        | Share-Based Awards         |
|--------------|------------------------------------------------------------|----------------------------|
| Name         | Number of Securities Underlying Unexercised Options(#) (1) | Option exercise Price(US$) | Option Expiration Date | Value of Unexercised In-the-Money Options($)(2) | Number of Shares or Units of Share that Have Not Vested(#) | Market or Payout Value of Share-Based Awards That Have Not Vested($) |
| Brian Evans  | 80,000                                                     | 0.50                       | April 5, 2014 | 4,000 | - | - |
| Fred Zeidman | 150,000                                                    | 0.50                       | April 5, 2014 | 7,500 | - | - |
| Neil McCrank | 80,000                                                     | 0.50                       | April 5, 2014 | 4,000 | - | - |
| Elden Schorn | 100,000                                                    | 0.50                       | April 5, 2014 | 5,000 | - | - |

| 1) | "Options" includes all options, share purchase warrants and rights granted by our company as compensation for employment services or office.  Pursuant to the common share consolidation on June 20, 2011 all Options are shown on a consolidated basis |
|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2) | "in-the-money Options" means the excess of the closing price of our common shares on April 30, 2011 over the exercise price of the options.  Our company’s shares trade on the Over-the-Counter-Bulletin Board in the United States.  The closing price of our common shares on April 29, 2011 (last trade day) was as US$0.55 per share |
|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Item 6. | Directors, Senior Management and Employees - continued |
|---------|--------------------------------------------------------|

| C.  | Board Practices |
|----------|-----------------|

----

|   |   |
|--------|--------|

----

| Item 6. | Directors, Senior Management and Employees - continued |
|---------|--------------------------------------------------------|

| D. | Employees |
|----|-----------|

|                                | 2011 | 2010 | 2009 |
|-------------------------------------|------|------|------|
| Directors - Canada                  | 2    | 3    | 4    |
| Directors - USA                     | 2    | 2    | 1    |
| Senior Management - Canada          | 2    | 3    | 4    |
| Senior Management - USA             | 1    | 1    | 0    |
| Managers & Supervisors - Canada | 2    | 2    | 2    |
| Managers & Supervisors - USA    | 2    | 2    | 2    |
| Office Staff - Canada               | 0    | 1    | 3    |
| Office Staff - USA                  | 0    | 1    | 1    |
| Field Staff - USA                   | 13   | 11   | 2    |
| Total Employees                     | 24   | 26   | 19   |

| E. | Share Ownership |
|----|-----------------|

| NameOffice Held                         | Common Shares          | Options and Dilutive SecuritiesExercisable for Common Shares(1) |
|-----------------------------------------|------------------------|-----------------------------------------------------------------|
| Number Beneficially Owned(2)            | Percentage of Class(3) | Number Beneficially Owned(unexercised)                          | ExercisePrice | ExpirationDate |
| Tim MorrisonCEO, Secretary and Director | -                      | -                                                               | 500,000100,000 | US$0.50US$0.50 | January 1, 2015April 5, 2015 |
| George OrrDirector                      | 95,000                 | *                                                               | 230,000 | US$0.50 | April 5, 2015 |
| Elden SchornDirector                    | -                      | -                                                               | - | - | - |
| Fred ZeidmanDirector                    | -                      | -                                                               | - | - | - |
| Jeffrey FreedmanCFO                     | 500,000 (4)            | 3.6%                                                            | - | - | - |
| Pat McCarronVice President, Operations  | 25,000                 | *                                                               | 112,500 | US$0.50 | April 5, 2015 |

----

| Item 6. | Directors, Senior Management and Employees - continued |
|---------|--------------------------------------------------------|

| (1) | Includes vested and unvested stock options granted under our Canadian equity incentive plan and our U.S. equity incentive plan.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) | Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission, and generally includes voting or investment power with respect to securities. Common shares relating to options currently exercisable or exercisable within 60 days of the date of the above table are deemed outstanding for computing the percentage of the person holding such securities but are not deemed outstanding for computing the percentage of any other person. Except as indicated by footnote, and subject to community property laws where applicable, the persons named in the table above have sole voting and investment power with respect to all shares shown as beneficially owned by them. |

| (3) | The percentages shown are based on 14,078,947 common shares issued and outstanding as of October 31, 2011.                                                                            |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (4) | Includes 250,000 common shares issuable upon conversion of 500 shares of Series B Preferred Stock and 250,000 common shares issuable upon exercise of common stock purchase warrants. |

----

| Item 6. | Directors, Senior Management and Employees - continued |
|---------|--------------------------------------------------------|

----

| Item 6. | Directors, Senior Management and Employees - continued |
|---------|--------------------------------------------------------|

|                   | Option-Based Awards                                        | Share-Based Awards         |
|------------------------|------------------------------------------------------------|----------------------------|
| Name                   | Number of Securities Underlying Unexercised Options(#) (1) | Option exercise Price(US$) | Option Expiration Date | Value of Unexercised In-the-Money Options($)(2) | Number of Shares or Units of Share that Have Not Vested(#) | Market or Payout Value of Share-Based Awards That Have Not Vested($) |
| Tim Morrison           | 500,000                                                    | 0.50                       | Jan. 1, 2015 | 25,000 | - | - |
| Tim Morrison           | 100,000                                                    | 0.50                       | April 5, 2015 | 5,000 | - | - |
| George OrrDirector (4) | 230,000                                                    | 0.50                       | April 5, 2014 | 11,500 | - | - |
| Pat McCarron           | 112,500                                                    | 0.50                       | April 5, 2014 | 5,625 | - | - |
| Wayne Sampson          | 90,000                                                     | 0.50                       | April 5, 2014 | 4,500 | - | - |
| George Stapleton, II   | 230,000                                                    | 0.50                       | April 5, 2014 | 11,500 | - | - |
| Kelly D. Kerr          | -                                                          | -                          | - | - | - | - |
| R. William Thornton    | -                                                          | -                          | - | - | - | - |

| (1) | "Options" includes all options, share purchase warrants and rights granted by our company as compensation for employment services or office.  Pursuant to the common share consolidation on June 20, 2011 all Options are shown on a consolidated basis |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | "in-the-money Options" means the excess of the closing price of our common shares on April 30, 2011 over the exercise price of the options.  Our company’s shares trade on the Over-the-Counter-Bulletin Board in the United States.  The closing price of our common shares on April 29, 2011 (last trade day) was as US$0.55 per share. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Item 6. | Directors, Senior Management and Employees - continued |
|---------|--------------------------------------------------------|

|                        |   | Number of |      |   | Weighted Avg.  |   |
|-----------------------------|--------|-----------|-----------|--------|----------------|--------|
|                        |   | Options   |      |   | Exercise Price |   |
| Outstanding, April 30, 2008 |   |      | 965,000   |   |           | $      | 8.10 |   |
| Granted                     |   |      | 647,300   |   |           |   | 2.70 |   |
| Forfeited                   |   |      | (410,100  | )      |           |   | (5.30 | ) |
| Cancelled                   |   |      | (454,350  | )      |           |   | (8.90 | ) |
| Outstanding, April 30, 2009 |   |      | 747,850   |   |           | $      | 4.10 |   |
| Granted                     |   |      | 413,200   |   |           |   | 1.40 |   |
| Forfeited                   |   |      | (91,250   | )      |           |   | (4.90 | ) |
| Outstanding, April 30, 2010 |   |      | 1,069,800 |   |           | $      | 3.00 |   |
| Granted                     |   |      | 1,302,000 |   |           |   | 0.50 |   |
| Expired                     |   |      | (213,500  | )      |           |   | (4.90 | ) |
| Forfeited                   |   |      | (304,000  | )      |           |   | (2.50 | ) |
| Cancelled                   |   |      | (450,000  | )      |           |   | (2.80 | ) |
| Outstanding, April 30, 2011 |   |      | 1,404,300 |   |           | $      | 0.60 |   |

|           |   |   | Options Outstanding |      |                        | Options Exercisable |                        |
|----------------|--------|--------|---------------------|-----------|-----------------------------|---------------------|-----------------------------|
| Exercise Price |   |   | Options             |      | Weighted Avg.Remaining Life |                | Weighted Avg.Exercise Price |   |   | Options |   |   | Weighted Avg.Exercise Price |   |
| $ 0.50         |   |   |                | 1,302,000 |                        | 3.2 years           |                        | $ | 0.50 |   |   |   | 772,500 |   |   | $ | 0.50 |   |
| $ 1.50         |   |   |                | 97,150    |                        | 1.0 years           |                        | $ | 1.50 |   |   |   | 75,050 |   |   | $ | 1.50 |   |
| $ 1.80         |   |   |                | 5,000     |                        | 2.7 years           |                        | $ | 1.80 |   |   |   | 2,500 |   |   | $ | 1.80 |   |
| $ 6.20         |   |   |                | 150       |                        | 1.2 years           |                        | $ | 6.20 |   |   |   | 150 |   |   | $ | 6.20 |   |
|           |   |   |                |      | 1,404,300                   |                | 3.1 years                   |   | $ | 0.60 |   |   |   | 850,200 |   |   | $ | 0.60 |   |

----

| Item 7.  | Major Shareholders and Related Party Transactions |
|--------------------|---------------------------------------------------|

| A. | Major Shareholders |
|----|--------------------|

| B. | Related Party Transactions |
|----|----------------------------|

| C. | Interests of experts and counsel. |
|----|-----------------------------------|

| Item 8. | Financial Information |
|---------|-----------------------|

| A. | Consolidated Statements and Other Financial Information. |
|----|----------------------------------------------------------|

----

| Item 8. | Financial Information - continued |
|---------|-----------------------------------|

| Year Ended April 30 |   |   |      |
|--------------------------|--------|--------|-----------|
| 2011                     |   | $      | 473,055   |   |
| 2012                     |   |   | 473,055   |   |
| 2013                     |   |   | 473,055   |   |
| 2014                     |   |   | 177,164   |   |
| Thereafter               |   |   | -         |   |
| Total                    |   | $      | 1,596,329 |   |

----

| Item 8. | Financial Information - continued |
|---------|-----------------------------------|

| B. | Significant Changes |
|----|---------------------|

| Item 9. | The Offer and Listing |
|---------|-----------------------|

| A. | Offer and Listing Details |
|----|---------------------------|

| Fiscal Year Ended | OTC Bulletin Board |
|-------------------|--------------------|
| High              | Low                |
| April 30, 2011    | US$1.40            | US$0.14 |
| April 30, 2010    | US$1.30            | US$1.00 |
| April 30, 2009    | US$7.10            | US$0.10 |
| April 30, 2008    | US$27.50           | US$4.00 |
| April 30, 2007    | US$27.50           | US$5.00 |

| Quarter Ended    | OTC Bulletin Board |
|------------------|--------------------|
| High             | Low                |
| October 31, 2011 | US$0.20            | US$0.05 |
| July 31, 2011    | US$0.60            | US$0.07 |
| April 30, 2011   | US$0.77            | US$0.28 |
| January 31, 2011 | US$0.45            | US$0.14 |
| October 31, 2010 | US$0.50            | US$0.20 |
| July 31, 2010    | US$0.80            | US$0.80 |
| April 30, 2010   | US$1.30            | US$1.00 |
| January 31, 2010 | US$1.80            | US$1.50 |
| October 31, 2009 | US$0.90            | US$0.80 |
| July 31, 2009    | US$0.40            | US$0.30 |

| Month Ended        | OTC Bulletin Board |
|--------------------|--------------------|
| High               | Low                |
| October 30, 2011   | US$0.14            | US$0.05 |
| September 30, 2011 | US$0.14            | US$0.06 |
| August 31, 2011    | US$0.20            | US$0.12 |
| July 31, 2011      | US$0.35            | US$0.10 |
| June 30, 2011      | US$0.50            | US$0.07 |
| May 31, 2011       | US$0.60            | US$0.42 |

----

| Item 9. | The Offer and Listing - continued |
|---------|-----------------------------------|

| B. | Plan of Distribution |
|----|----------------------|

| C. | Markets |
|----|---------|

| D. | Selling Shareholders |
|----|----------------------|

| E. | Dilution |
|----|----------|

| F. | Expenses of the Issue |
|----|-----------------------|

| Item 10. | Additional Information |
|----------|------------------------|

| A. | Share Capital |
|----|---------------|

| B. | Memorandum and Articles of Association |
|----|----------------------------------------|

----

| Item 10. | Additional Information - continued |
|----------|------------------------------------|

----

| Item 10. | Additional Information - continued |
|----------|------------------------------------|

|   | • | the acquisition of our common shares by a person in the ordinary course of that person's business as a trader or dealer in securities; |
|--------|---------|----------------------------------------------------------------------------------------------------------------------------------------|

|   | • | the acquisition of control of our company in connection with the realization of security granted for a loan or other financial assistance and not for a purpose related to the provisions of the Investment Canada Act; and |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | the acquisition of control of our company by reason of an amalgamation, merger, consolidation or corporate reorganization following which the ultimate direct or indirect control in fact of our company, through ownership of our common shares, remains unchanged. |
|--------|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| C. | Material Contracts |
|----|--------------------|

----

| Item 10. | Additional Information - continued |
|----------|------------------------------------|

|   | • | Issuance of Senior II Notes for proceeds of $4.6 million, maturing 18 months after closing, with an annual coupon rate of 8% cash or 12% in additional Senior II Notes at the Company’s option for the first six months after closing and at the holder’s option thereafter. Senior II Notes are redeemable in cash at any time or convertible into common shares at $0.20 per common share at the Company’s option if the underlying shares are freely tradable and common shares trade at or above $2.50 for the previous 20 consecutive trading days and the daily average trading volume has been in excess of US $750,000 per day for the same period. Senior II Note holders received one warrant for each $0.50 principal amount of the Senior Notes for 9,200,000 warrants (Senior II Warrants). Senior II Warrants are exercisable at $0.25 per share for a period of 36 months after closing. |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | In the event the Company issues common shares or securities convertible into or exercisable for common shares at a price per share or conversion or exercise price less than the conversion or exercise prices agreed to for each note, the conversion price of the notes and the exercise price of the warrants is automatically reduced to such lower prices. The number of warrants outstanding will be increased such that the expected exercise proceeds remain unchanged. |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Item 10. | Additional Information - continued |
|----------|------------------------------------|

----

| Item 10. | Additional Information - continued |
|----------|------------------------------------|

----

| Item 10. | Additional Information - continued |
|----------|------------------------------------|

----

| Item 10. | Additional Information - continued |
|----------|------------------------------------|

| D. | Exchange Controls. |
|----|--------------------|

| E. | Taxation. |
|----|-----------|

|   | • | an individual citizen or resident of the United States or an individual treated as a U.S. citizen or resident for U.S. federal income tax purposes; |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | a corporation or other entity taxable as a corporation for U.S. federal income tax purposes created or organized in or under the laws of the United States, any State or the District of Columbia; |
|--------|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | an estate, the income of which is subject to U.S. federal income taxation regardless of its source; or |
|--------|---------|--------------------------------------------------------------------------------------------------------|

|   | • | any trust if (A)(i) a court within the United States is able to exercise primary supervision over the administration of the trust and (ii) one or more United States persons have the authority to control all substantial decisions of the trust, or (B) such trust validly elects to be treated as a United States person. |
|--------|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | insurance companies; |
|--------|---------|----------------------|

|   | • | dealers in stocks, securities or currencies; |
|--------|---------|----------------------------------------------|

----

| Item 10. | Additional Information - continued |
|----------|------------------------------------|

|   | • | financial institutions and financial services entities; |
|--------|---------|---------------------------------------------------------|

|   | • | real estate investment trusts; |
|--------|---------|--------------------------------|

|   | • | regulated investment companies; |
|--------|---------|---------------------------------|

|   | • | persons that receive common shares in connection with the performance of services; |
|--------|---------|------------------------------------------------------------------------------------|

|   | • | tax-exempt organizations; |
|--------|---------|---------------------------|

|   | • | persons that hold common shares as part of a straddle or appreciated financial position or as part of a hedging, conversion or other integrated instrument; |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | persons who acquire their common shares through the exercise or cancellation of employee stock options or otherwise as consideration for their services; |
|--------|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | individual retirement and other tax-deferred accounts; |
|--------|---------|--------------------------------------------------------|

|   | • | expatriates of the United States and certain former long-term residents of the United States; |
|--------|---------|-----------------------------------------------------------------------------------------------|

|   | • | persons liable for the alternative minimum tax; |
|--------|---------|-------------------------------------------------|

|   | • | persons having a “functional currency” other than the U.S. dollar; and |
|--------|---------|------------------------------------------------------------------------------------|

|   | • | direct, indirect or constructive owners of 10% or more, by voting power or value, of our common shares. |
|--------|---------|---------------------------------------------------------------------------------------------------------|

----

| Item 10. | Additional Information - continued |
|----------|------------------------------------|

----

| Item 10. | Additional Information - continued |
|----------|------------------------------------|

|   | • | that gain is effectively connected with the conduct by the Non-U.S. Holder of a trade or business in the United States, and, if a tax treaty applies, is attributable to a permanent establishment or fixed base of the Non-U.S. Holder in the United States; or |
|--------|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | in the case of any gain realized by an individual Non-U.S. Holder, that holder is present in the United States for 183 days or more in the taxable year of the sale or exchange, and other conditions are met. |
|--------|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Item 10. | Additional Information - continued |
|----------|------------------------------------|

|   | • | a non-resident of Canada; |
|--------|---------|---------------------------|

|   | • | holds our common shares as capital property; |
|--------|---------|----------------------------------------------|

|   | • | deals with us at arm's length; and |
|--------|---------|------------------------------------|

|   | • | does not use or hold our common shares in or in the course of carrying on business in Canada. |
|--------|---------|-----------------------------------------------------------------------------------------------|

|   | • | to the extent such holder is a company that beneficially owns at least 10% of our voting stock, 5% of the gross amount of such distribution paid; or |
|--------|---------|------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | in all other cases, 15% of the gross amount of such distribution paid. |
|--------|---------|------------------------------------------------------------------------|

----

| Item 10. | Additional Information - continued |
|----------|------------------------------------|

| F.  | Dividends and paying agents |
|----------|-----------------------------|

| G.  | Statement by experts |
|----------|----------------------|

| H.  | Documents on display |
|----------|----------------------|

----

| Item 10. | Additional Information - continued |
|----------|------------------------------------|

| I.  | Subsidiary Information |
|----------|------------------------|

| Item 11. | Quantitative and Qualitative Disclosure About Market Risk |
|----------|-----------------------------------------------------------|

| Item 12. | Description of Securities Other than Equity Securities |
|----------|--------------------------------------------------------|

----

| PART II |
|---------|

| Item 13. | Defaults, Dividend Arrearages and Delinquencies |
|----------|-------------------------------------------------|

| Item 14. | Material Modifications to the Rights of Security Holders and Use of Proceeds |
|----------|------------------------------------------------------------------------------|

| Item 15. | Controls and Procedures. |
|----------|--------------------------|

|   | • | pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company; |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use of disposition of the company’s assets that could have a material effect on the financial statements. |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Item 15. | Controls and Procedures. - continued |
|----------|--------------------------------------|

|   | • | We have an insufficient number of personnel that have sufficient knowledge and experience in accounting, including U.S. GAAP. |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------|

|   | • | Due to our small number of employees and resources, we have limited segregation of duties, as a result of which there is insufficient independent review of duties performed. |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | As a result of the limited number of accounting personnel, we rely on outside consultants for the preparation of our financial reports, including financial statements and management discussion and analysis, which could lead to overlooking items requiring disclosure. |
|--------|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Item 16. | [Reserved] |
|----------|------------|

| Item 16A. | Audit Committee Financial Expert. |
|-----------|-----------------------------------|

| Item 16B. | Code of Ethics. |
|-----------|-----------------|

----

| Item 16C. | Principal Accountant Fees and Services. |
|-----------|-----------------------------------------|

| Item 16D. | Exemptions from the Listing Standards for Audit Committees. |
|-----------|-------------------------------------------------------------|

| Item 16E. | Purchases of Equity Securities by the Issuer and Affiliated Purchasers. |
|-----------|-------------------------------------------------------------------------|

| Item 16F. | Change in Registrant’s Certifying Accountant. |
|-----------|-----------------------------------------------------|

| Item 16G. | Corporate Governance. |
|-----------|-----------------------|

----

| Item 17. | Financial Statements |
|----------|----------------------|

| Consolidated Financial Statements of Gravis Oil Corporation                                                             |   |
|-------------------------------------------------------------------------------------------------------------------------|--------|
| Report of Independent Registered Public Accounting Firm                                                                 |   |   | F-2 |   |
| Consolidated Balance Sheets at April 30, 2011 and 2010                                                                  |   |   | F-3 |   |
| Consolidated Statements of Operations, Comprehensive Loss and Deficit for the years ended April 30, 2011, 2010 and 2009 |   |   | F-4 |   |
| Consolidated Statements of Accumulated Other Comprehensive Loss for the years ended April 30, 2011, 2010 and 2009       |   |   | F-5 |   |
| Consolidated Statements of Cash Flows for the years ended April 30, 2011, 2010 and 2009                                 |   |   | F-6 |   |
| Notes to Consolidated Financial Statements April 30, 2011                                                               |   |   | F-7 |   |

| Item 18. | Financial Statements |
|----------|----------------------|

| Item 19. | Exhibits |
|----------|----------|

| ExhibitNumber | Description                                                                                                                                                                                                      |
|---------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 1.1           | Certificate of Incorporation - British Columbia (1)                                                                                                                                                              |
| 1.2           | Notice of Articles - British Columbia (2)                                                                                                                                                                        |
| 1.3           | Certificate of Name Change - British Columbia (2)                                                                                                                                                                |
| 1.4           | Articles - British Columbia (2)                                                                                                                                                                                  |
| 1.5           | Certificate of Continuance - Alberta (3)                                                                                                                                                                         |
| 1.6           | Articles of Continuance - Alberta (3)                                                                                                                                                                            |
| 1.7           | By-law No. 1 - Alberta (3)                                                                                                                                                                                       |
| 4.1           | Canadian Stock Option Plan dated August 24, 2004, amended and restated February 19, 2007 and August 9, 2007 (4)                                                                                             |
| 4.2           | U.S. Stock Option Plan dated January 5, 2007 (4)                                                                                                                                                                 |
| 4.3           | Operating and Farm-in Agreement dated October 24, 2007 in respect Loma Area, Montana (Big Sky project) (5)                                                                                                       |
| 4.4           | Operating and Farm-in Agreement dated October 24, 2007 in respect Teton Area, Montana (Big Sky project) (5)                                                                                                      |
| 4.5           | Canadian Equity Incentive Plan, amended and restated June 5, 2008 (6)                                                                                                                                            |
| 4.6           | U.S. Equity Incentive Plan, amended and restated June 5, 2008 (6)                                                                                                                                                |
| 4.7           | Agreement of Purchase and Sale dated August 27, 2009 between MegaWest Energy Missouri Corp. and Mega Partners 1, LLC (6)                                                                                         |
| 4.8           | Operating Agreement dated August 27, 2009 between MegaWest Energy Missouri Corp. and Mega Partners 1, LLC (6)                                                                                                    |
| 4.9           | Side Letter Agreement dated August 27, 2009 between MegaWest Energy Missouri Corp. and Mega Partners 1, LLC (6)                                                                                                  |
| 4.10          | Form of Subscription Agreement entered into with various subscribers in August, 2009 (6)                                                                                                                         |
| 4.11          | Form of Subscription Agreement dated July 30, 2010, among MegaWest Energy Corp. and certain subscribers for US$2,500,000 Senior Convertible Notes (7)                                                       |
| 4.12          | Form of Exchange Agreement dated July 30, 2010, among MegaWest Energy Corp. and the holders of Series A preferred shares to convert the Series A preferred shares into US$2,501,069 Junior Convertible Notes (7) |
| 8.1           | Subsidiaries (7)                                                                                                                                                                                                 |
| 11.1          | Code of Ethics (7)                                                                                                                                                                                               |
| 12.1          | Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act, as amended                                                                                                |
| 12.2          | Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act, as amended                                                                                                |
| 13.1          | Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                     |
| 15.1          | Consent of GLJ Petroleum Consultants                                                                                                                                                                             |

----

| Item 19. | Exhibits - continued |
|----------|----------------------|

| (1) | Incorporated by reference to our Form 6-K filed with the Securities and Exchange Commission on March 6, 2006.   |
|-----|-----------------------------------------------------------------------------------------------------------------|
| (2) | Incorporated by reference to our Form 20-F filed with the Securities and Exchange Commission on March 30, 2007. |

| (3) | Incorporated by reference to our Form F-1/A filed with the Securities and Exchange Commission on February 15, 2008. |
|-----|---------------------------------------------------------------------------------------------------------------------|
| (4) | Incorporated by reference to our Form 20-F filed with the Securities and Exchange Commission on August 10, 2007.    |

| (5) | Incorporated by reference to our Form F-1/A filed with the Securities and Exchange Commission on December 31, 2007. |
|-----|---------------------------------------------------------------------------------------------------------------------|
| (6) | Incorporated by reference to our Form 6-K filed with the Securities and Exchange Commission on September 4, 2009.   |
| (7) | Incorporated by reference to our Form 6-K filed with the Securities and Exchange Commission on November 16, 2010.   |

----

|          | GRAVIS OIL CORPORATION |
|---------------|------------------------|
|          |                   |
| June 21, 2012 | By:                    | /s/ JEFFREY FREEDMAN |
|          |                   | Jeffrey Freedman |
|          |                   | Chief Financial Officer |
|          |                   |   |

----

----

----

| (formerly MegaWest Energy Corp.)Consolidated Balance Sheets(United States dollars) |
|------------------------------------------------------------------------------------|

|                                                                                                                                                           |   | April 30, 2011 |         |   | April 30, 2010 |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------|--------------|--------|----------------|--------|
| Assets                                                                                                                                                         |   |           |         |   |           |   |
| Current assets                                                                                                                                                 |   |           |         |   |           |   |
|    Cash and cash equivalents                                                                                                                    |   | $              | 1,179,838    |   |           | $      | 150,005 |   |
|    Cash in escrow (note 10(b))                                                                                                                  |   |           | 658,000      |   |           |   | - |   |
|    Accounts receivable                                                                                                                          |   |           | 231,316      |   |           |   | 457,071 |   |
|    Prepaid expenses and deposits                                                                                                                |   |           | 92,196       |   |           |   | 173,288 |   |
|                                                                                                                                                           |   |           | 2,161,350    |   |           |   | 780,364 |   |
| Oil and gas assets (note 6)                                                                                                                                    |   |           | 17,975,830   |   |           |   | 30,287,809 |   |
| Administrative assets                                                                                                                                          |   |           | 19,498       |   |           |   | 79,963 |   |
| Long-term receivable (note 7)                                                                                                                                  |   |           | 294,862      |   |           |   | 307,620 |   |
| Reclamation deposits (note 9)                                                                                                                                  |   |           | 143,696      |   |           |   | 140,815 |   |
| Deferred transaction costs (note 10)                                                                                                                           |   |           | 223,276      |   |           |   | - |   |
|                                                                                                                                                           |   | $              | 20,818,512   |   |           | $      | 31,596,571 |   |
| Liabilities                                                                                                                                                    |   |           |         |   |           |   |   |   |
| Current liabilities                                                                                                                                            |   |           |         |   |           |   |   |   |
|     Accounts payable and accrued liabilities                                                                                               |   | $              | 1,251,736    |   |           | $      | 744,408 |   |
|     Interest payable                                                                                                                       |   |           | 505,696      |   |           |   | - |   |
|     Asset retirement obligations (note 9)                                                                                                  |   |           | 205,700      |   |           |   | 245,657 |   |
|     Current liability portion of convertible notes (note 10)                                                                               |   |           | 1,626,243    |   |           |   | - |   |
|                                                                                                                                                           |   |           | 3,589,375    |   |           |   | 990,065 |   |
| Asset retirement obligations (note 9)                                                                                                                          |   |           | 521,636      |   |           |   | 521,883 |   |
| Liability portion of convertible notes (note 10)                                                                                                               |   |           | 5,040,020    |   |           |   | - |   |
| Derivatives (note 11)                                                                                                                                          |   |           | 14,499,894   |   |           |   | 1,330,909 |   |
|                                                                                                                                                           |   |           | 23,650,925   |   |           |   | 2,842,857 |   |
| Shareholders’ Deficit                                                                                                                                    |   |           |         |   |           |   |   |   |
| Common shares - Unlimited shares without par value authorized; 14,078,947 issued April 30, 2011;  13,328,947 issued April 30, 2010 (note 12)         |   |           | 79,016,425   |   |           |   | 78,836,171 |   |
| Preferred A shares ­- 100,000,000 authorized; nil issued April 30, 2011; 22,000 with a $100 stated value and no par value issued April 30, 2010 (note 12) |   |           | -            |   |           |   | 1,881,262 |   |
| Contributed surplus                                                                                                                                            |   |           | 54,341,320   |   |           |   | 53,613,475 |   |
| Accumulated other comprehensive loss (note 2)                                                                                                                  |   |           | (272,156     | )      |           |   | 11,615 |   |
| Accumulated deficit from prior operations                                                                                                                      |   |           | (443,861     | )      |           |   | (443,861 | ) |
| Accumulated deficit from development stage                                                                                                                     |   |           | (135,474,141 | )      |           |   | (105,144,948 | ) |
|                                                                                                                                                           |   |           | (2,832,413   | )      |           |   | 28,753,714 |   |
|                                                                                                                                                           |   | $              | 20,818,512   |   |           | $      | 31,596,571 |   |

| /s/  F. George Orr                                          |   | /s/  Tim L. Morrison                                                 |
|------------------------------------------------------------------|--------|--------------------------------------------------------------------------------|
| F. George Orr, Director and Chairman of the Audit Committee |   | Tim L. Morrison, President and Chief Executive Officer, Director and Secretary |

| See accompanying notes to consolidated financial statements. |
|--------------------------------------------------------------|

----

| (formerly MegaWest Energy Corp.) |
|----------------------------------|

| Consolidated Statements of Operations and Comprehensive Loss(United States dollars) |
|-------------------------------------------------------------------------------------|

|                                          |   | Years ended April 30 |        |   |   From Development Stage Inception on November 1, 2006 through |   |
|-----------------------------------------------|--------|----------------------|-------------|--------|---------------------------------------------------------------------|--------|
|                                          |   | 2011                 |        |   | 2010                                                                |   |   | 2009 |   |   | April 30, 2011 |   |
| Revenue and other income                      |   |                 |        |   |                                                                |   |   |   |   |   |   |   |
| Oil sales                                     |   | $                    | 1,565,963   |   |                                                                | $      | 1,575,150 |   |   | $ | – |   |   | $ | 3,141,113 |   |
| Interest income                               |   |                 | 16,213      |   |                                                                |   | 6,073 |   |   |   | 135,190 |   |   |   | 1,044,941 |   |
|                                          |   |                 | 1,582,176   |   |                                                                |   | 1,581,223 |   |   |   | 135,190 |   |   |   | 4,186,054 |   |
| Expenses                                      |   |                 |        |   |                                                                |   |   |   |   |   |   |   |   |   |   |   |
| Operating                                     |   |                 | 3,470,746   |   |                                                                |   | 3,955,084 |   |   |   | – |   |   |   | 7,425,830 |   |
| Impairment of oil and gas assets (note 6)     |   |                 | 12,848,677  |   |                                                                |   | 1,162,545 |   |   |   | 57,468,799 |   |   |   | 99,064,260 |   |
| General and administrative (note 15)          |   |                 | 3,307,060   |   |                                                                |   | 3,193,449 |   |   |   | 4,046,550 |   |   |   | 32,041,960 |   |
| Depreciation, depletion and accretion         |   |                 | 844,160     |   |                                                                |   | 293,113 |   |   |   | 127,884 |   |   |   | 1,353,141 |   |
| Loss on marketable securities                 |   |                 | –     |   |                                                                |   | – |   |   |   | – |   |   |   | 1,676,173 |   |
| Interest and accretion                        |   |                 | 1,512,443   |   |                                                                |   | – |   |   |   | 12,479 |   |   |   | 3,888,233 |   |
| Foreign exchange loss (gain)                  |   |                 | (86,959     | )      |                                                                |   | 98,225 |   |   |   | (1,573,251 | ) |   |   | 1,534,760 |   |
| Change in fair value of derivatives (note 11) |   |                 | 9,395,435   |   |                                                                |   | 829,166 |   |   |   | – |   |   |   | 10,224,601 |   |
| Change in fair value of exchange shares       |   |                 | –     |   |                                                                |   | – |   |   |   | – |   |   |   | (18,387,365 | ) |
|                                          |   |                 | 31,291,562  |   |                                                                |   | 9,531,582 |   |   |   | 60,082,461 |   |   |   | 138,821,593 |   |
| Net loss                                      |   |                 | (29,709,386 | )      |                                                                |   | (7,950,359 | ) |   |   | (59,947,271 | ) |   |   | (134,635,539 | ) |
| Foreign exchange translation                  |   |                 | (283,771    | )      |                                                                |   | 4,984,026 |   |   |   | (13,832,144 | ) |   |   | (272,156 | ) |
| Total comprehensive loss                      |   | $                    | (29,993,157 | )      |                                                                | $      | (2,966,333 | ) |   | $ | (84,955,892 | ) |   | $ | (134,907,695 | ) |
|                                          |   |                 |        |   |                                                                |   |   |   |   |   |   |   |   |   |   |   |
| Net loss per share                            |   |                 |        |   |                                                                |   |   |   |   |   |   |   |   |   |   |   |
| Basic and diluted                             |   | $                    | (2.22       | )      |                                                                | $      | (0.60 | ) |   | $ | (4.60 | ) |   |   |   |   |
|                                          |   |                 |        |   |                                                                |   |   |   |   |   |   |   |   |   |   |   |
| Weighted average shares outstanding           |   |                 |        |   |                                                                |   |   |   |   |   |   |   |   |   |   |   |
| Basic and diluted (note 14)                   |   |                 | 13,387,166  |   |                                                                |   | 13,325,545 |   |   |   | 13,035,892 |   |   |   |   |   |

| See accompanying notes to consolidated financial statements. |
|--------------------------------------------------------------|

----

| (formerly MegaWest Energy Corp.) |
|----------------------------------|

| Consolidated Statement of Shareholders’ Deficit(United States dollars) |
|------------------------------------------------------------------------------|

|                                     |   |   |       |   |        |   |       |     |   |   |        |   |   | Accumulated   |       |   |        |   |        |                |   |
|------------------------------------------|--------|--------|------------|--------|-------------|--------|------------|----------|--------|--------|-------------|--------|--------|---------------|------------|--------|-------------|--------|-------------|---------------------|--------|
|                                     |   |   |       |   |        |   |       |     |   |   |        |   |   | Other         |       |   |        |   |        | Total               |   |
|                                     |   | Common |       |   | Preferred A |   |       |     |   |   | Contributed |   |   | Comprehensive |       |   | Accumulated |   |        | Shareholders’ |   |
|                                     |   | Shares |       |   | Shares      |   |       | Warrants |   |   | Surplus     |   |   | Income        |       |   | Deficit     |   |        | Deficit             |   |
| Period from inception to April 30, 2008: |   |   |       |   |        |   |       |     |   |   |        |   |   |          |       |   |        |   |        |                |   |
| Issued, net of costs (note 12)           |   | $      | 57,217,824 |   |        | $      | -          |     |   | $      | 46,022,853  |   |   | $             | (167,565   | )      |        | $      | -           |                |   | $ | - |   |   | $ | 103,073,112 |   |
| Foreign exchange translation             |   |   | -          |   |        |   | -          |     |   |   | -           |   |   |          | -          |   |        |   | 8,859,733   |                |   |   | - |   |   |   | 8,859,733 |   |
| Stock-based compensation                 |   |   | -          |   |        |   | -          |     |   |   | -           |   |   |          | 10,384,259 |   |        |   | -           |                |   |   | - |   |   |   | 10,384,259 |   |
| Net loss                                 |   |   | -          |   |        |   | -          |     |   |   | -           |   |   |          | -          |   |        |   | -           |                |   |   | (37,472,384 | ) |   |   | (37,472,384 | ) |
| Balance at April 30, 2008                |   | $      | 57,217,824 |   |        | $      | -          |     |   | $      | 46,022,853  |   |   | $             | 10,216,694 |   |        | $      | 8,859,733   |                |   | $ | (37,472,384 | ) |   | $ | 84,844,720 |   |
| Issued, net of costs (note 12)           |   |   | 21,610,709 |   |        |   | -          |     |   |   | (3,911,252  | )      |   |          | -          |   |        |   | -           |                |   |   | - |   |   |   | 17,699,457 |   |
| Foreign exchange translation             |   |   | -          |   |        |   | -          |     |   |   | -           |   |   |          | -          |   |        |   | (13,832,144 | )                   |   |   | - |   |   |   | (13,832,144 | ) |
| Stock-based compensation (note 13)       |   |   | -          |   |        |   | -          |     |   |   | -           |   |   |          | 784,887    |   |        |   | -           |                |   |   | - |   |   |   | 784,887 |   |
| Expiry of warrants                       |   |   | -          |   |        |   | -          |     |   |   | (42,111,601 | )      |   |          | 42,111,601 |   |        |   | -           |                |   |   | - |   |   |   | - |   |
| Net loss                                 |   |   | -          |   |        |   | -          |     |   |   | -           |   |   |          | -          |   |        |   | -           |                |   |   | (59,947,271 | ) |   |   | (59,947,271 | ) |
| Balance at April 30, 2009                |   | $      | 78,828,533 |   |        | $      | -          |     |   | $      | -           |   |   | $             | 53,113,182 |   |        | $      | (4,972,411  | )                   |   | $ | (97,419,655 | ) |   | $ | 29,549,649 |   |
| Issued, net of costs (note 12)           |   |   | 7,638      |   |        |   | 1,662,467  |     |   |   | -           |   |   |          | -          |   |        |   | -           |                |   |   | - |   |   |   | 1,670,105 |   |
| Preferred A Shares dividend (note 12)    |   |   | -          |   |        |   | 218,795    |     |   |   | -           |   |   |          | -          |   |        |   | -           |                |   |   | (218,795 | ) |   |   | - |   |
| Foreign exchange translation             |   |   | -          |   |        |   | -          |     |   |   | -           |   |   |          | -          |   |        |   | 4,984,026   |                |   |   | - |   |   |   | 4,984,026 |   |
| Stock-based compensation (note 13)       |   |   | -          |   |        |   | -          |     |   |   | -           |   |   |          | 500,293    |   |        |   | -           |                |   |   | - |   |   |   | 500,293 |   |
| Net loss                                 |   |   | -          |   |        |   | -          |     |   |   | -           |   |   |          | -          |   |        |   | -           |                |   |   | (7,950,359 | ) |   |   | (7,950,359 | ) |
| Balance at April 30, 2010                |   | $      | 78,836,171 |   |        | $      | 1,881,262  |     |   | $      | -           |   |   | $             | 53,613,475 |   |        | $      | 11,615      |                |   | $ | (105,588,809 | ) |   | $ | 28,753,714 |   |
| Issued, net of costs (note 12)           |   |   | 180,254    |   |        |   | -          |     |   |   | -           |   |   |          | -          |   |        |   | -           |                |   |   | - |   |   |   | 180,254 |   |
| Preferred A Shares dividend (note 12)    |   |   | -          |   |        |   | 82,274     |     |   |   | -           |   |   |          | -          |   |        |   | -           |                |   |   | (82,274 | ) |   |   | - |   |
| Preferred A Shares exchange (note 12)    |   |   | -          |   |        |   | (1,963,536 | )        |   |   | -           |   |   |          | -          |   |        |   | -           |                |   |   | (537,533 | ) |   |   | (2,501,069 | ) |
| Foreign exchange translation             |   |   | -          |   |        |   | -          |     |   |   | -           |   |   |          | -          |   |        |   | (283,771    | )                   |   |   | - |   |   |   | (283,771 | ) |
| Stock-based compensation (note 13)       |   |   | -          |   |        |   | -          |     |   |   | -           |   |   |          | 727,845    |   |        |   | -           |                |   |   | - |   |   |   | 727,845 |   |
| Net loss                                 |   |   | -          |   |        |   | -          |     |   |   | -           |   |   |          | -          |   |        |   | -           |                |   |   | (29,709,386 | ) |   |   | (29,709,386 | ) |
| Balance at April 30, 2011                |   | $      | 79,016,425 |   |        | $      | -          |     |   | $      | -           |   |   | $             | 54,341,320 |   |        | $      | (272,156    | )                   |   | $ | (135,918,002 | ) |   | $ | (2,832,413 | ) |

| See accompanying notes to consolidated financial statements. |
|--------------------------------------------------------------|

----

| (formerly MegaWest Energy Corp.) |
|----------------------------------|

| Consolidated Statements of Cash Flows (United States dollars) |
|--------------------------------------------------------------------|

|                                                                    |   | Years ended April 30 |        |   | From Development Stage Inception on November 1, 2006 through |   |
|-------------------------------------------------------------------------|--------|----------------------|-------------|--------|--------------------------------------------------------------|--------|
|                                                                    |   | 2011                 |        |   | 2010                                                         |   |   | 2009 |   |   | April 30, 2011 |   |
| Operating activities                                                    |   |                 |        |   |                                                         |   |   |   |   |   |   |   |
| Net loss                                                                |   | $                    | (29,709,386 | )      |                                                         | $      | (7,950,359 | ) |   | $ | (59,947,271 | ) |   | $ | (134,635,539 | ) |
| Adjustments to reconcile net loss to cash used by operating activities: |   |                 |        |   |                                                         |   |   |   |   |   |   |   |   |   |   |   |
| Impairment of oil and gas assets                                        |   |                 | 12,848,677  |   |                                                         |   | 1,162,545 |   |   |   | 57,468,799 |   |   |   | 99,064,260 |   |
| Depreciation, depletion and accretion                                   |   |                 | 844,160     |   |                                                         |   | 293,113 |   |   |   | 127,884 |   |   |   | 1,353,141 |   |
| Interest and accretion expense                                          |   |                 | 1,512,443   |   |                                                         |   | - |   |   |   | 12,305 |   |   |   | 3,888,233 |   |
| Stock-based compensation                                                |   |                 | 885,160     |   |                                                         |   | 457,085 |   |   |   | 534,934 |   |   |   | 18,152,238 |   |
| Unrealized foreign exchange loss (gain)                                 |   |                 | (36,181     | )      |                                                         |   | 139,679 |   |   |   | (2,039,522 | ) |   |   | 1,724,969 |   |
| Loss on marketable securities                                           |   |                 | -           |   |                                                         |   | - |   |   |   | - |   |   |   | 1,676,173 |   |
| Unrealized change in fair value of derivatives                          |   |                 | 9,395,435   |   |                                                         |   | 829,166 |   |   |   | - |   |   |   | 10,224,601 |   |
| Unrealized change in fair value of exchange shares                      |   |                 | -           |   |                                                         |   | - |   |   |   | - |   |   |   | (18,387,365 | ) |
| Interest paid                                                           |   |                 | (50,083     | )      |                                                         |   | - |   |   |   | - |   |   |   | (50,083 | ) |
| Change in long-term accounts receivable                                 |   |                 | 12,758      |   |                                                         |   | (304,120 | ) |   |   | - |   |   |   | (291,362 | ) |
| Change in non-cash working capital                                      |   |                 | 580,174     |   |                                                         |   | 431,746 |   |   |   | (238,793 | ) |   |   | 990,974 |   |
|                                                                    |   |                 | (3,716,843  | )      |                                                         |   | (4,941,145 | ) |   |   | (4,081,664 | ) |   |   | (16,289,760 | ) |
| Financing activities                                                    |   |                 |        |   |                                                         |   |   |   |   |   |   |   |   |   |   |   |
| Proceeds from issuance of convertible notes                             |   |                 | 7,100,000   |   |                                                         |   | - |   |   |   | - |   |   |   | 7,100,000 |   |
| Proceeds from issuance of preferred shares                              |   |                 | -           |   |                                                         |   | 2,136,950 |   |   |   | - |   |   |   | 2,136,950 |   |
| Proceeds from issuance of common shares                                 |   |                 | -           |   |                                                         |   | - |   |   |   | 12,970,061 |   |   |   | 48,068,853 |   |
| Proceeds from exercise of stock options and warrants                    |   |                 | -           |   |                                                         |   | - |   |   |   | 111,422 |   |   |   | 458,945 |   |
| Transaction costs                                                       |   |                 | (327,752    | )      |                                                         |   | - |   |   |   | - |   |   |   | (327,752 | ) |
| Notes payable                                                           |   |                 | -           |   |                                                         |   | - |   |   |   | - |   |   |   | (36,182 | ) |
| Change in cash in escrow                                                |   |                 | (658,000    | )      |                                                         |   | - |   |   |   | - |   |   |   | (658,000 | ) |
|                                                                    |   |                 | 6,114,248   |   |                                                         |   | 2,136,950 |   |   |   | 13,081,483 |   |   |   | 56,742,814 |   |
| Investing activities                                                    |   |                 |        |   |                                                         |   |   |   |   |   |   |   |   |   |   |   |
| Expenditures on oil and gas assets                                      |   |                 | (1,361,890  | )      |                                                         |   | (941,322 | ) |   |   | (14,010,367 | ) |   |   | (33,325,706 | ) |
| Expenditures on administrative assets                                   |   |                 | (3,054      | )      |                                                         |   | (7,401 | ) |   |   | (36,887 | ) |   |   | (385,523 | ) |
| Disposition of oil and gas assets                                       |   |                 | -           |   |                                                         |   | 2,391,077 |   |   |   | - |   |   |   | 2,391,077 |   |
| Acquisitions, net of cash acquired                                      |   |                 | -           |   |                                                         |   | - |   |   |   | - |   |   |   | (4,153,508 | ) |
| Marketable securities                                                   |   |                 | -           |   |                                                         |   | - |   |   |   | - |   |   |   | (1,675,193 | ) |
| Change in reclamation deposit                                           |   |                 | (2,881      | )      |                                                         |   | 33,494 |   |   |   | (15,929 | ) |   |   | (143,696 | ) |
|                                                                    |   |                 | (1,367,825  | )      |                                                         |   | 1,475,848 |   |   |   | (14,063,183 | ) |   |   | (37,292,549 | ) |
| Change in cash and cash equivalents                                     |   |                 | 1,029,580   |   |                                                         |   | (1,328,347 | ) |   |   | (5,063,364 | ) |   |   | 3,160,505 |   |
| Exchange rate fluctuations on cash and cash                             |   |                 |        |   |                                                         |   |   |   |   |   |   |   |   |   |   |   |
| Equivalents                                                             |   |                 | 253         |   |                                                         |   | (2,377 | ) |   |   | 1,420,801 |   |   |   | (1,988,332 | ) |
| Cash and cash equivalents, beginning of period                          |   |                 | 150,005     |   |                                                         |   | 1,480,729 |   |   |   | 5,123,292 |   |   |   | 7,665 |   |
| Cash and cash equivalents, end of period                                |   | $                    | 1,179,838   |   |                                                         | $      | 150,005 |   |   | $ | 1,480,729 |   |   | $ | 1,179,838 |   |

| See accompanying notes to consolidated financial statements. |
|--------------------------------------------------------------|

----

----

| 1. | Development Stage and Going Concern: |
|----|--------------------------------------|

| 2. | Change in Reporting and Functional Currency: |
|----|----------------------------------------------|

----

----

| 3. | Basis of Preparation: |
|----|-----------------------|

| 4. | Share Consolidation: |
|----|----------------------|

| 5. | Significant Accounting Policies: |
|----|----------------------------------|

| (a) | Principles of Consolidation: These financial statements include the accounts of Gravis and its wholly-owned subsidiary, MegaWest Energy USA Corp. and its wholly owned subsidiaries: |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| MegaWest Energy Texas Corp.    |
|--------------------------------|
| MegaWest Energy Kentucky Corp. |
| MegaWest Energy Missouri Corp. |
| MegaWest Energy Kansas Corp.   |
| MegaWest Energy Montana Corp.  |

|   | A significant portion of the Company’s activities are conducted jointly with others and these consolidated financial statements reflect only the Company’s proportionate interest in such activities. All intercompany balances and transactions have been eliminated. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b) | Use of Estimates and Measurement Uncertainty: |
|-----|-----------------------------------------------|

|   | The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts and other disclosures in these financial statements. Actual results may differ from those estimates due to factors such as fluctuations in interest rates, currency exchange rates, inflation levels and commodity prices, changes in economic conditions and legislative and regulatory changes. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Significant estimates used in the preparation of these financial statements include estimates of oil and gas reserves and resources and the estimated value of the unproved properties, fair value of the Preferred A Shares at the date of their exchange, derivative fair values, stock-based compensation fair values and estimated cost and timing related to asset retirement obligations. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

| 5. | Significant Accounting Policies - continued |
|----|---------------------------------------------|

|   | Certain fair value estimates are based on expected volatility of the Company’s share price. In 2011, the Company used a volatility rate based on peer entities rather than historical trading prices of its common shares as used in 2010 and prior years. The volatility of peer entities is considered more representative for the Company due to the dilutive impact of financings completed in 2011 and the limited trading of the Company’s shares on the OTC Bulletin Board. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c) | Cash and Cash Equivalents: |
|-----|----------------------------|

|   | Cash and cash equivalents consist of highly liquid investments with terms to maturity, at the date of acquisition, not exceeding 90 days. The Company’s cash balances are maintained in both United States and Canadian banks. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (d) | Oil and Gas Operations: |
|-----|-------------------------|

|   | The Company follows the full cost method of accounting for oil and gas operations whereby all costs related to exploration and development of oil and gas reserves are capitalized. Under this method, the Company capitalizes all acquisition, exploration and development costs incurred for the purpose of finding oil and natural gas reserves, including salaries, benefits and other internal costs directly attributable to these activities. Costs associated with production and general corporate activities, however, are expensed in the period incurred. Costs are capitalized on a country-by-country basis. To date, there has only been one cost center, the United States. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Capitalized costs of oil and natural gas properties may not exceed an amount equal to the present value, discounted at 10%, of estimated future net revenues from proved reserves plus the cost of unproven properties. Should capitalized costs exceed this ceiling, impairment is recognized. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The present value of estimated future net cash flows is computed by applying the average first-day-of-the-month prices during the previous twelve-month period of oil and natural gas to estimated future production of proved oil and natural gas reserves as of year-end less estimated future expenditures to be incurred in developing and producing the proved reserves and assuming continuation of existing economic conditions. Prior to December 31, 2009, prices and costs used to calculate future net cash flows were those as of the end of the appropriate quarterly period. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Following the discovery of reserves and the commencement of production, the Company computes depletion of oil and natural gas properties using the unit-of-production method based upon production and estimates of proved reserve quantities. Costs associated with unproved properties are excluded from the depletion calculation until it is determined whether or not proved reserves can be assigned to such properties. Unproved properties are assessed for impairment quarterly. Significant properties are assessed individually. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The Company assesses all items classified as unproved property on a quarterly basis for possible impairment. The Company assesses properties on an individual basis or as a group if properties are individually insignificant. The assessment includes consideration of the following factors, among others: land relinquishment; intent to drill; remaining lease term; geological and geophysical evaluations; drilling results and activity; the assignment of proved reserves; and the economic viability of development if proved reserves are assigned. During any period in which these factors indicate impairment, the related exploration costs incurred are transferred to the full cost pool and are then subject to depletion and the ceiling limitations on development oil and natural gas expenditures. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

| 5. | Significant Accounting Policies - continued |
|----|---------------------------------------------|

|   | Proceeds from the sale of oil and gas assets are applied against capitalized costs, with no gain or loss recognized, unless a sale would alter the rate of depletion and depreciation by 25 percent or more. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (e) | Administrative Assets: |
|-----|------------------------|

|   | Leasehold improvements, office furniture and equipment are stated at cost. Depreciation on leasehold improvements, office furniture and equipment is provided on a straight-line basis over five years. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (f)  | Asset Retirement Obligations: The Company recognizes a liability for the estimated fair value of site restoration and abandonment costs when the obligations are legally incurred and the fair value can be reasonably estimated. The fair value of the obligations is based on the estimated cash flow required to settle the obligations discounted using the Company's credit adjusted risk-free interest rate. The obligation is recorded as a liability with a corresponding increase in the carrying amount of the oil and gas assets. The capitalized amount will be depleted on a unit-of-production method. The liability is increased each period, or accretes, due to the passage of time and a corresponding amount is recorded in the statement of operations. Revisions to the estimated fair value would result in an adjustment to the liability and the capitalized amount in oil and gas assets. |
|-----------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (g) | Foreign Currency Translation:  Commencing July 30, 2010, the US dollar is the functional currency of the Company and its subsidiaries. Monetary assets and liabilities denominated in foreign currencies are translated to US dollars at the exchange rate in effect at the balance sheet date and non-monetary assets and liabilities at the exchange rates in effect at the time of the transactions. Revenues and expenses are translated to US dollars at rates approximating exchange rates in effect at the time of the transactions. Exchange gains and losses resulting from the period-end translation of monetary assets and liabilities denominated in foreign currencies are recorded in the statement of operations. For periods prior to July 30, 2010, the functional currency of the Company and its subsidiaries was Cdn dollar, which was translated into US dollars, the Company’s reporting currency, using the current rate method. Under this method, assets and liabilities are translated at the closing rate in effect at the end of the comparative period; revenues, expenses and cash flows are translated at the average rate in effect for the period; and equity transactions are translated at historical rates. Translation adjustments are included in accumulated other comprehensive loss presented in shareholders’ equity. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

| 5. | Significant Accounting Policies - continued |
|----|---------------------------------------------|

| (h) | Oil Revenue: Sales of crude oil are recognized in the period in which the product is delivered to a customer. Oil revenue represents the Company's share and is recorded net of royalty payments to governments and other mineral interest owners.  |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (i) | Stock-Based Compensation: The Company accounts for all stock options and warrants granted to employees, directors and certain service providers using the fair value method. Under this method, compensation expense is recorded with a corresponding credit to contributed surplus. Stock-based compensation expense for employees is based on the estimated fair value of the related option or warrant at the time of grant and is expensed on a straight-line basis over the vesting period of the option. Stock-based compensation expense for other service providers is based on the estimated fair value of the related option or warrant once vested. At the end of each reporting period, the fair value of each option and warrant not vested is re-calculated and the appropriate amount is expensed in that period. Compensation expense is adjusted for the estimated amount of forfeitures.    The Company issues common shares from treasury on the exercise of stock options and warrants and consideration received upon the exercise of stock options and warrants together with the amount of non-cash compensation expense recognized in contributed surplus is recorded as the amount of common shares. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (j) | Income Taxes:  The Company follows the asset and liability method of tax allocation accounting. This method requires the recognition of deferred tax liabilities and assets for the expected future tax consequences of temporary differences between financial accounting bases and tax bases of assets and liabilities. The tax benefits of tax loss carry-forwards and other deferred taxes are recorded as an asset to the extent that management assesses the utilization of such assets to be more likely than not. Deferred tax assets and liabilities are measured using the tax rate in effect for the year in which those temporary differences are expected to be recovered or settled. The effect of a change in tax rates of deferred tax assets and liabilities is recognized in income in the year of the enacted rate change. Deferred tax assets are reduced by a valuation allowance when it is more likely than not that some portion or all of the deferred tax assets will not be realized.    The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. During 2011, 2010 and 2009, there were no charges for interest or penalties.  |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (k) | Per Share Amounts: Basic per share amounts are computed by dividing the loss by the weighted average shares outstanding during the reporting period. Diluted amounts for options and consulting and other warrants are computed using the treasury stock method. The treasury stock method assumes that proceeds received from the exercise of in-the-money options and warrants are used to repurchase shares at the average market price for the period. The difference between the number of shares that could have been purchased at market prices in the period and the number of in-the-money options and warrants is added to the weighted average shares outstanding. Dilutive amounts for convertible notes are determined by using the “as if converted method”. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

| 5. | Significant Accounting Policies - continued  |
|----|---------------------------------------------------|

| (l) | Financial Instruments: All financial instruments, including derivatives, are to be recognized on the balance sheet initially at fair value. Subsequent measurement of all financial assets and liabilities except those held-for-trading and available for sale are measured at amortized cost determined using the effective interest rate method. Held-for-trading financial assets are measured at fair value with changes in fair value recognized in earnings. Available-for-sale financial assets are measured at fair value with changes in fair value recognized in comprehensive income and reclassified to earnings when derecognized or impaired.    Transaction costs attributable to certain financial instruments classified as other than held-for-trading and available for sale, such as the liability portion of convertible notes, are presented as a deferred asset on the balance sheet and recognized as an expense over the term of the related financial instrument. Other transaction costs are expensed on recognition of the instrument. The Company has classified its financial assets and liabilities as follows: |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Held-for-trading          | Loans and receivables | Other liabilities                        |
|---------------------------|-----------------------|------------------------------------------|
|                      |                  |                                     |
| Cash and cash equivalents | Accounts receivable   | Accounts payable and accrued liabilities |
| Derivatives               | Long-term receivable  | Interest payable                         |
|                      |                  | Liability portion of convertible notes   |

|   | At each balance sheet date, the Company assesses financial assets for impairment with any impairment recorded in the consolidated statement of operations. To assess loans and receivables for impairment, the Company evaluates the probability of collection of accounts receivable and records an allowance for doubtful accounts, which reduces loans and receivables to the amount management reasonably believes will be collected. In determining the amount of the allowance, the following factors are considered: the length of the time the receivable has been outstanding, specific knowledge of each customer’s financial condition and historical experience.  Fair value is 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 (exit price).  Fair value measurements are categorized using a valuation hierarchy for disclosure of the inputs used to measure fair value, which prioritized the inputs into three broad levels:  Level 1 - Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis.  Level 2 - Pricing inputs are other than quoted prices in active markets included in level 1, which are either directly or indirectly observable as of the reported date and includes those financial instruments that are valued using models or other valuation methodologies.  Level 3 - Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

| 5. | Significant Accounting Policies - continued |
|----|---------------------------------------------|

| (m) | Derivatives: The Company evaluates all financial instruments for freestanding and embedded derivatives. Warrants and conversion features related to convertible notes and preferred shares do not have readily determinable fair values and therefore require significant management judgment and estimation. The Company uses the Black-Scholes and binomial pricing model to estimate the fair value of warrant and note conversion feature at the end of each applicable reporting period. Changes in the fair value of these derivatives during each reporting period are included in the statement of operations. Inputs into the Black-Scholes pricing model require estimates, including such items as estimated volatility of the Company’s stock and the estimated life of the financial instruments being fair valued.  |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (n) | Recent Accounting Pronouncements: The FASB has issued ASU No. 2010-13, Compensation - Stock Compensation (Topic 718): Effect of Denominating the Exercise Price of a Share-Based Payment Award in the Currency of the Market in Which the Underlying Equity Security Trades. This ASU codifies the consensus reached in EITF Issue No. 09-J, "Effect of Denominating the Exercise Price of a Share-Based Payment Award in the Currency of the Market in Which the Underlying Equity Security Trades." The amendments to the Codification clarify that an employee share-based payment award with an exercise price denominated in the currency of a market in which a substantial portion of the entity’s equity shares trades should not be considered to contain a condition that is not a market, performance, or service condition. Therefore, an entity would not classify such an award as a liability if it otherwise qualifies as equity. This rule will not have a material impact on the Company’s financial position or results of operations. The Company has applied the principles from the update in its financial reporting.In January 2010, the FASB issued Accounting Standards Update 2010-06, Fair Value Measurements and Disclosures (Topic 820): Improving Disclosures about Fair Value Measurements. The ASU amends Subtopic 820-10 with new disclosure requirements and clarification of existing disclosure requirements. New disclosures required include the amount of significant transfers in and out of levels 1 and 2 fair value measurements and the reasons for the transfers. In addition, the reconciliation for level 3 activity will be required on a gross rather than net basis. The ASU provides additional guidance related to the level of disaggregation in determining classes of assets and liabilities and disclosures about inputs and valuation techniques. The amendments are effective for annual or interim reporting periods beginning after December 15, 2009, except for the requirement to provide the reconciliation for level 3 activities on a gross basis, which will be effective for fiscal years beginning after December 15, 2010. The Company is currently assessing the impact of ASU 2010-6 and does not expect the adoption of this guidance to have a material impact on its consolidated financial statements.    The FASB has issued ASU 2011-05, Comprehensive Income: Presentation of Comprehensive Income, the requirements of which increase in the prominence of other comprehensive income in financial statements. The Company is currently assessing the impact of ASU 2011-05 and does not expect adoption of this guidance to have a material impact on its consolidated financial statements. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

| 6. | Oil and Gas Assets: |
|----|---------------------|

| Cost                         |   | Missouri (a) |       |   | Kentucky(b) |   |       | Montana (c) |   |   | Kansas (d) |   |   | Texas (e) |   |   | Other (f) |   |   | Total  |   |
|------------------------------|--------|--------------|------------|--------|-------------|--------|------------|-------------|--------|--------|------------|--------|--------|-----------|--------|--------|-----------|--------|--------|--------|--------|
| Balance, April 30, 2010      |   | $            | 24,936,309 |   |        | $      | 3,215,682  |        |   | $      | 686,209    |   |   | $         | 94,613 |   |      | $      | -      |   |   | $ | 1,354,996 |   |   | $ | 30,287,809 |   |
| Additions                    |   |         | 1,516,465  |   |        |   | 102,364    |        |   |   | -          |   |   |      | 4,745  |   |      |   | -      |   |   |   | - |   |   |   | 1,623,574 |   |
| Depletion                    |   |         | (720,740   | )      |        |   | -          |        |   |   | -          |   |   |      | -      |   |      |   | -      |   |   |   | - |   |   |   | (720,740 | ) |
| Impairment                   |   |         | (9,066,590 | )      |        |   | (3,179,174 | )           |   |   | (602,913   | )      |   |      | -      |   |      |   | -      |   |   |   | - |   |   |   | (12,848,677 | ) |
| Foreign currency translation |   |         | (301,444   | )      |        |   | (38,872    | )           |   |   | (8,296     | )      |   |      | (1,144 | )      |      |   | -      |   |   |   | (16,380 | ) |   |   | (366,136 | ) |
| Balance, April 30, 2011      |   | $            | 16,364,000 |   |        | $      | 100,000    |        |   | $      | 75,000     |   |   | $         | 98,214 |   |      | $      | -      |   |   | $ | 1,338,616 |   |   | $ | 17,975,830 |   |

| Cost                         |   | Missouri (a) |       |   | Kentucky(b) |   |      | Montana (c) |   |   | Kansas (d) |   |   | Texas (e) |   |   | Other (f) |   |     | Total  |   |
|------------------------------|--------|--------------|------------|--------|-------------|--------|-----------|-------------|--------|--------|------------|--------|--------|-----------|--------|--------|-----------|--------|----------|--------|--------|
| Balance, April 30, 2009      |   | $            | 22,462,582 |   |        | $      | 2,695,991 |        |   | $      | 1,273,963  |   |   | $         | 83,803 |   |      | $      | 251,460  |   |   | $ | 1,529,053 |   |   | $ | 28,296,852 |   |
| Additions                    |   |         | 714,821    |   |        |   | 49,223    |        |   |   | 15,413     |   |   |      | -      |   |      |   | -        |   |   |   | 5,557 |   |   |   | 785,014 |   |
| Recoveries and transfers     |   |         | 38,311     |   |        |   | -         |        |   |   | -          |   |   |      | (3,200 | )      |      |   | (323     | )      |   |   | (4,719 | ) |   |   | 30,069 |   |
| Disposition                  |   |         | (2,011,529 | )      |        |   | -         |        |   |   | -          |   |   |      | -      |   |      |   | -        |   |   |   | (379,548 | ) |   |   | (2,391,077 | ) |
| Depletion                    |   |         | (95,815    | )      |        |   | -         |        |   |   | -          |   |   |      | -      |   |      |   | -        |   |   |   | - |   |   |   | (95,815 | ) |
| Impairment                   |   |         | -          |   |        |   | -         |        |   |   | (816,696   | )      |   |      | -      |   |      |   | (290,237 | )      |   |   | (55,612 | ) |   |   | (1,162,545 | ) |
| Foreign currency translation |   |         | 3,827,939  |   |        |   | 470,468   |        |   |   | 213,529    |   |   |      | 14,010 |   |      |   | 39,100   |   |   |   | 260,265 |   |   |   | 4,825,311 |   |
| Balance, April 30, 2010      |   | $            | 24,936,309 |   |        | $      | 3,215,682 |        |   | $      | 686,209    |   |   | $         | 94,613 |   |      | $      | -        |   |   | $ | 1,354,996 |   |   | $ | 30,287,809 |   |

| Cost                         |   | Missouri (a) |       |   | Kentucky(b) |   |        | Montana (c) |   |   | Kansas (d)  |   |   | Texas (e) |       |   | Other (f) |   |     | Total  |   |
|------------------------------|--------|--------------|------------|--------|-------------|--------|-------------|-------------|--------|--------|-------------|--------|--------|-----------|------------|--------|-----------|--------|----------|--------|--------|
| Balance, April 30, 2008      |   | $            | 15,426,924 |   |        | $      | 43,241,600  |        |   | $      | 17,464,748  |   |   | $         | 3,912,739  |   |      | $      | 297,870  |   |   | $ | 1,567,335 |   |   | $ | 81,911,216 |   |
| Additions                    |   |         | 9,842,427  |   |        |   | 1,729,644   |        |   |   | 1,351,879   |   |   |      | 289,679    |   |      |   | 578,319  |   |   |   | 916,508 |   |   |   | 14,708,456 |   |
| Impairment                   |   |         | -          |   |        |   | (36,981,914 | )           |   |   | (15,396,845 | )      |   |      | (3,646,484 | )      |      |   | (578,319 | )      |   |   | (865,237 | ) |   |   | (57,468,799 | ) |
| Foreign currency translation |   |         | (2,806,769 | )      |        |   | (5,293,339  | )           |   |   | (2,145,819  | )      |   |      | (472,131   | )      |      |   | (46,410  | )      |   |   | (89,553 | ) |   |   | (10,854,021 | ) |
| Balance, April 30, 2009      |   | $            | 22,462,582 |   |        | $      | 2,695,991   |        |   | $      | 1,273,963   |   |   | $         | 83,803     |   |      | $      | 251,460  |   |   | $ | 1,529,053 |   |   | $ | 28,296,852 |   |

----

----

| 6. | Oil and Gas Assets - continued  |
|----|--------------------------------------|

|   | • | MP1 has the option to acquire up to a 20% proportionate interest in any of the Company’s properties outside of the Deerfield Area by paying a proportionate 133% of the Company’s costs-to-date in respect of such property. |
|--------|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | MP1 has the option to participate with the Company in any future oil and gas property acquisitions for a proportionate 20% share of any such acquisitions. |
|--------|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (a) | Missouri  Effective July 1, 2010, Gravis reacquired the 10% working interest in the Company’s Marmaton River and Grassy Creek projects it had sold during fiscal 2010 to MP1, in exchange for a 2.75% gross overriding royalty interest on the projects. Following this acquisition, Gravis has a 100% working interest in both projects. At April 30, 2011, the Company had an average 98.3% working interest in approximately 38,119 gross acres of oil and gas leases. Costs incurred relate to lease acquisition, geological and geophysical activities, exploration and delineation drilling and facilities for the Marmaton River and Grassy Creek projects. Subsequent to April 30, 2011, as a result of the Company’s financial position, cost factors and market conditions it suspended operations on its Missouri oil and gas assets.    MP1 retains the option to acquire up to a 10% interest in future projects within the Deerfield Area, on a project by project basis, by paying up to a US $300,000 equalization payment per project and thereafter its proportionate share of all future development and operating costs in respect of such project, including a proportionate share of facility costs.    As at April 30, 2011, the Company performed a ceiling test calculation to assess the ceiling limitation of the proved oil properties in Missouri and determined that its net capitalized costs for the Missouri projects exceeded the ceiling limitation. As a result, the Company recorded an impairment charge of $9,066,590 (2010 - $nil; 2009 - $nil) on the Missouri projects.    During 2011, the Company earned an average price of $59 per barrel of oil equivalent (boe) (2010 -$52.90; 2009 ­- $nil) and incurred operating expenses of $130.70 per boe (2010 - $132.80; 2009 - $nil). The Company’s 2011 depletion rate was $27.15 per boe (2010 - $6.02; 2009 - $nil). |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b) | Kentucky The Company has a 37.5% working interest in the shallow rights and an additional 37.5% working interest in the deep rights in certain oil and gas leases totaling approximately 29,147 unproved net mineral acres (10,930 net acres).    On September 21, 2010, the Company and its 62.5% working interest partner (together the “Farmor”) signed a farm-out agreement for their interest in 5,100 net acres in the Little Muddy Area of Butler County, Kentucky. On December 4, 2010, this farm-out agreement was expanded to cover the full 29,147 unproved net mineral acres. All acreage leased in Kentucky by the Farmor and the Farmee in Butler, Warren, Edmonson and Muhlenberg counties shall be pooled and be subject to the new agreement, including approximately 1,000 net acres owned by the Farmee which are contiguous with Farmor’s leases. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

| 6. | Oil and Gas Assets - continued  |
|----|--------------------------------------|

|   | In 2011, the Farmee, at its sole cost, will drill, test and complete or abandon wells at locations of its choice on the joint lands, test production technologies and construct any production facilities required. Upon Farmee recovering all of its project development costs out of 100% of the working interest revenue attributable to each production project on the joint lands, the working interest in, and revenue from, each such project will be shared 50% by the Farmee and 50% by the Farmor (Gravis 18.75%, working interest partner 31.25%). During each year of the 4-year term of this agreement, the Farmee is required to pay all lease rentals attributable to the joint lands and drill a sufficient number of wells to hold a minimum of 15% of the joint lands. The parties will share any sale proceeds from the pooled lands, net of cost recovery, in proportion to their respective working interests. During the year ended April 30, 2011, the Company recorded an impairment charge of $3,179,174 (2010 - $nil; 2009 - $36,981,914) on the Kentucky project as a result of the lack of development activity by the Farmee and the curtailment of Company plans to continue exploration on the project due to a lack of available capital. As a result of these factors and to help raise capital for other purposes the Company is seeking to depose of its interest in this property. To date no offers have been received on the property and the amount that may be ultimately realized is uncertain.  |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c) | Montana The Montana leases include an average 55.3% working interest in 15,688 unproved net mineral acres in Montana covering two prospects, Teton and Devils Basin.    During the year ended April 30, 2011 the Company recorded an impairment charge of $602,913 (2010 - $816,696, 2009 - $15,396,845) on the Montana project. The impairment was recorded due to the expiry of leases and curtailment of plans to continue exploration on the lands in the near term because of the lack of capital available for this project. The remaining costs represent the Company’s estimate of the fair value of the leases as determined by sales in the area for long term leases with farmout potential and related seismic value.  |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (d) | Kansas The Chetopa project consists of a 100% interest in two oil and gas leases covering 385 net mineral acres located two miles south of Chetopa, Kansas. The project was suspended in fiscal 2009. During the year ended April 30, 2011 the Company recorded an impairment charge of $nil (2010 - $nil, 2009 - $3,646,484). The carrying value of the Chetopa project represents the estimated salvage value of the equipment.  |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (e) | Texas The Company is a working interest owner in the Trinity Sands Project covering 34,000 unproved net mineral acres in Texas. The Company has an average 39.8% working interest in 29,516 unproved mineral net acres (11,751 company net acres) in Texas comprised of a 50% working interest in 17,489 net mineral acres and 25% working interest in the remaining 12,027 net mineral acres. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

| 6. | Oil and Gas Assets - continued |
|----|--------------------------------|

|   | Costs accumulated on the project relate to land acquisition, geological and geophysical activities and exploration drilling. During the year ended April 30, 2011, the Company recorded an impairment charge of $nil (2010 - $290,237; 2009 - $578,319). The impairment was recorded as the Company has no plans to continue exploration on these lands. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (f) | Other Other costs consist of five used steam generators and related equipment. During the year ended April 30, 2010 the Company sold certain steam generation equipment for cash proceeds of $379,548. During the year ended April 30, 2011, the Company recorded an impairment charge of $nil (2010 -$55,612; 2009 - $865,237). |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 7. | Long-term Receivable: |
|----|-----------------------|

| 8. | Natural Gas Purchase Line of Credit Agreement: |
|----|------------------------------------------------|

| 9. | Asset Retirement Obligations: |
|----|-------------------------------|

|                                                                   |   | 2011   |     |   | 2010   |   |     | 2009   |   |
|------------------------------------------------------------------------|--------|--------|----------|--------|--------|--------|----------|--------|--------|
| Balance, beginning of year                                             |   | $      | 767,540  |   |   | $      | 858,286  |   |   | $ | 292,914 |   |
| Additions                                                              |   |   | 42,197   |   |   |   | -        |   |   |   | 542,694 |   |
| Disposition                                                            |   |   | -        |   |   |   | (32,200  | )      |   |   | - |   |
| Revisions                                                              |   |   | (143,268 | )      |   |   | (103,124 | )      |   |   | (9,650 | ) |
| Accretion                                                              |   |   | 60,867   |   |   |   | 44,578   |   |   |   | 32,328 |   |
|                                                                   |   |   | 727,336  |   |   |   | 767,540  |   |   |   | 858,286 |   |
| Current portion for cash flows expected to be incurred within one year |   |   | (205,700 | )      |   |   | (245,657 | )      |   |   | - |   |
| Long-term portion, end of year                                         |   | $      | 521,636  |   |   | $      | 521,883  |   |   | $ | 858,226 |   |

----

----

| 9. | Asset Retirement Obligations - continued |
|----|------------------------------------------|

| Year Ended April 30 |   |   |      |
|---------------------|--------|--------|-----------|
| 2011                |   | $      | 220,000   |   |
| 2012                |   |   | 40,000    |   |
| 2013                |   |   | -         |   |
| 2014                |   |   | 122,200   |   |
| 2015                |   |   | 135,600   |   |
| Thereafter          |   |   | 690,492   |   |
|                |   |   | 1,208,292 |   |
| Effect of discount  |   |   | (480,956  | ) |
| Total               |   | $      | 727,336   |   |

| 10. | Convertible Notes: |
|-----|--------------------|

----

----

| 10. | Convertible Notes - continued |
|-----|-------------------------------|

|            |   | Face value of the Notes |      |   | Carrying amount of the Notes |   |      | Conversion feature |   |   | Senior warrants |   |
|-----------------|--------|-------------------------|-----------|--------|------------------------------|--------|-----------|--------------------|--------|--------|-----------------|--------|
| Senior I Notes  |   | $                       | 2,500,000 |   |                         | $      | 1,245,490 |               |   | $      | 327,790         |   |   | $ | 926,720 |   |
| Senior II Notes |   |                    | 4,600,000 |   |                         |   | 3,090,820 |               |   |   | 627,830         |   |   |   | 881,350 |   |
|            |   |                    | 7,100,000 |   |                         |   | 4,336,310 |               |   |   | 955,620         |   |   |   | 1,808,070 |   |
| Junior Notes    |   |                    | 2,501,069 |   |                         |   | 1,573,489 |               |   |   | 927,580         |   |   |   | - |   |
|            |   | $                       | 9,601,069 |   |                         | $      | 5,909,799 |               |   | $      | 1,883,200       |   |   | $ | 1,808,070 |   |

|                          |   | Face Value of the Notes |       |   | Carrying amount of the Notes |   |
|-------------------------------|--------|-------------------------|------------|--------|------------------------------|--------|
| Balance, April 30, 2010       |   | $                       | -          |   |                         | $      | - |   |
| Issued                        |   |                    | 9,601,069  |   |                         |   | 5,909,799 |   |
| Interest and accretion        |   |                    | -          |   |                         |   | 856,307 |   |
| Conversion of Senior I Notes  |   |                    | (150,000   | )      |                         |   | (99,843 | ) |
| Balance, April 30, 2011       |   |                    | 9,451,069  |   |                         |   | 6,666,263 |   |
| Senior I Note current portion |   |                    | (2,350,000 | )      |                         |   | (1,626,243 | ) |
| Long-term portion             |   | $                       | 7,101,069  |   |                         | $      | 5,040,020 |   |

| (a) | Senior I Notes The Senior I Notes pay interest quarterly at an annual rate of 8% in cash or 12% in additional Senior I Notes at the Company’s option until January 30, 2011 and at the holder’s option thereafter. The Senior I Notes mature on January 30, 2012 and are convertible at any time at the holder’s option at a conversion price of $0.50 per common share. The Senior I Notes are also redeemable in cash at any time at the Company’s option or convertible into common shares at the Company’s option if certain conditions have been met. In the event of redemption before the end of the term, there will be a 5% repayment premium. Note holders may elect to receive the redemption amount in common shares at the conversion price. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

| 10. | Convertible Notes - continued |
|-----|-------------------------------|

|   | In addition, one warrant was issued to the Senior I Note holders for each $0.50 principal amount of the Senior I Notes for a total of 5,000,000 Senior I Warrants (“Senior I Warrants”). The Senior I Warrants were initially exercisable at $0.50 per share until July 29, 2013. On December 28, 2010, the conversion price of the Senior I Notes was reduced to $0.20 per share and the number of Senior I Warrants was increased to 12,500,000 and the exercise price reduced to $0.20 per share.  The fair values of the conversion feature and Senior I Warrants were estimated using the Black-Scholes pricing model based on a risk-free rate of 0.29% - 0.84%, expected volatility of 75% - 100%, and an expected life of 18 months to 3 years.    In March and April 2011, the Company issued 750,000 common shares on the conversion of $150,000 principal amount of Senior I Notes for which $184,373 was credited to share capital (note 12) comprised of a $99,843 pro-rata portion of the liability and $84,530 of the conversion feature. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b) | Senior II Notes  The Senior II Notes pay interest quarterly at an annual rate of 8% in cash or 12% in additional Senior II Notes at the Company’s option for the first six months after closing and at the holder’s option thereafter. The Senior II Notes mature 18 months after closing (June 28, 2012, July 31, 2012, or September 7, 2012) and are convertible at any time at the holder’s option at a conversion price of $0.20 per common share. The Senior II Notes are also redeemable in cash at any time at the Company’s option or convertible into common shares at the Company’s option if certain conditions have been met. In the event of redemption before the end of the term, there will be a 15% premium due on the investment amount. Note holders may elect to receive the redemption in common shares at the conversion price.    In addition, one warrant has been issued to the Senior II Note holders for each $0.50 principal amount of the Senior Notes for a total of 9,200,000 Senior II Warrants (“Senior II Warrants”). The Senior II Warrants have an exercise price of $0.25 per share, of which 2,400,000 are exercisable until December 28, 2013, 5,600,000 are exercisable until January 31, 2014 and 1,200,000 are exercisable until March 7, 2014.    The fair values of the conversion feature and Senior II Warrants were estimated using the Black-Scholes pricing model based on a risk-free rate of 0.28% - 1.15%, expected volatility of 120% - 130%, and an expected life of 18 months to 3 years.    As at April 30, 2011, $658,000 of Senior II Note proceeds were held in an escrow account. This amount is made available to the Company upon written request by the board of directors. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c) | Junior Notes The Junior Notes pay interest quarterly at an annual rate of 5% in cash or 7.5% in additional Junior Notes at the Company’s option until January 30, 2011 and at the holder’s option thereafter. The Junior Notes mature on July 30, 2013 and are convertible at any time at the holder’s option at a conversion price of $0.50 per common share. The Junior Notes are redeemable in cash at any time at the Company’s option or convertible into common shares at the Company’s option if certain conditions have been met. In the event of redemption before the end of the term, there will be a 5% premium due on the investment amount. Note holders may elect to receive the redemption amount in common shares at the conversion price. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

| 10. | Convertible Notes - continued |
|-----|-------------------------------|

|   | On December 28, 2010, the conversion price of the Junior Notes was reduced to $0.20 per share pursuant to the terms described above.    The fair value of the conversion feature was estimated using the Black-Scholes pricing model based on a risk-free rate of 0.84%, expected volatility of 100%, and an expected life of 3 years. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 11. | Derivatives |
|-----|-------------|

|                               |   | Preferred AWarrants |      |   | Preferred B Option |   |      | Note conversion features |   |   | Warrants  |   |   | Consulting warrants |      |   | Total  |   |
|------------------------------------|--------|---------------------|-----------|--------|--------------------|--------|-----------|--------------------------|--------|--------|-----------|--------|--------|---------------------|-----------|--------|--------|--------|
| Balance, April 30, 2009            |   | $                   | -         |   |               | $      | -         |                     |   | $      | -         |   |   | $                   | -         |   |   | $      | - |   |   | $ | - |   |
| Preferred A Warrants (a) & (d) |   |                | 323,564   |   |               |   | -         |                     |   |   | -         |   |   |                | -         |   |   |   | - |   |   |   | 323,564 |   |
| Preferred B Option (b)             |   |                | -         |   |               |   | 138,671   |                     |   |   | -         |   |   |                | -         |   |   |   | - |   |   |   | 138,671 |   |
| Foreign currency translation       |   |                | 25,479    |   |               |   | 14,029    |                     |   |   | -         |   |   |                | -         |   |   |   | - |   |   |   | 39,508 |   |
| Change in fair value               |   |                | 391,226   |   |               |   | 437,940   |                     |   |   | -         |   |   |                | -         |   |   |   | - |   |   |   | 829,166 |   |
| Balance, April 30, 2010            |   |                | 740,269   |   |               |   | 590,640   |                     |   |   | -         |   |   |                | -         |   |   |   | - |   |   |   | 1,330,909 |   |
| Preferred B Option (b)             |   |                | -         |   |               |   | 10,894    |                     |   |   | -         |   |   |                | -         |   |   |   | - |   |   |   | 10,894 |   |
| Consulting Warrants (c)            |   |                | -         |   |               |   | -         |                     |   |   | -         |   |   |                | -         |   |   |   | 166,810 |   |   |   | 166,810 |   |
| Senior I Notes (note 10)           |   |                | -         |   |               |   | -         |                     |   |   | 327,790   |   |   |                | 926,720   |   |   |   | - |   |   |   | 1,254,510 |   |
| Senior II Notes (note 10)          |   |                | -         |   |               |   | -         |                     |   |   | 627,830   |   |   |                | 881,350   |   |   |   | - |   |   |   | 1,509,180 |   |
| Junior Notes (note 10)             |   |                | -         |   |               |   | -         |                     |   |   | 927,580   |   |   |                | -         |   |   |   | - |   |   |   | 927,580 |   |
| Conversion of Senior I Notes       |   |                | -         |   |               |   | -         |                     |   |   | (84,530   | )      |   |                |      |   |   |   |   |   |   |   | (84,530 | ) |
| Change in fair value               |   |                | 2,479,431 |   |               |   | 4,520,760 |                     |   |   | 1,070,960 |   |   |                | 988,820   |   |   |   | 324,570 |   |   |   | 9,384,541 |   |
| Balance, April 30, 2011            |   | $                   | 3,219,700 |   |               | $      | 5,122,294 |                     |   | $      | 2,869,630 |   |   | $                   | 2,796,890 |   |   | $      | 491,380 |   |   | $ | 14,499,894 |   |

|                | Preferred AWarrants | Preferred B Option | Conversion feature derivative | Senior warrants | Consulting warrants |
|---------------------|---------------------|--------------------|-------------------------------|-----------------|---------------------|
| Risk-free rate      | 1.01%               | 1.01%              | 0.32%                         | 0.78%           | 0.90%               |
| Expected volatility | 100%                | 100%               | 104%                          | 113%            | 122%                |
| Expected life       | 3.3 years           | 5 years            | 1.4 years                     | 2.5 years       | 2.6 years           |

| Issuance             |   | Number of Warrants |       |   | Weighted Avg.Exercise Price |   | Weighted Avg. Life Remaining |
|----------------------|--------|--------------------|------------|--------|-----------------------------|--------|------------------------------|
| Preferred A Warrants |   |               | 19,250,000 |   |                        | $      | 0.20                         |   | 3.33 years |
| Senior I Warrants    |   |               | 12,500,000 |   |                        |   | 0.20                         |   | 2.25 years |
| Senior II Warrants   |   |               | 9,200,000  |   |                        |   | 0.25                         |   | 2.75 years |
| Consulting Warrants  |   |               | 2,720,000  |   |                        |   | 0.25                         |   | 2.56 years |
|                 |   |               | 43,670,000 |   |                        | $      | 0.21                         |   | 2.85 years |

----

----

| 11. | Derivatives - continued |
|-----|-------------------------|

| (a) | Preferred A Warrants: In conjunction with the Preferred A Shares issuance in August 2009, the Company issued 1,540,000 warrants (the “Preferred A Warrants”) to the Series A investors. Each Preferred A Warrant allows the holder to purchase a common share at $0.25 per share until August 28, 2014. After May 28, 2010 a cashless conversion option was available only with respect to Preferred A Warrant shares not included for unrestricted public resale in an effective registration statement on the date notice of exercise is given to the Company. All of the Preferred A Warrants are outstanding as at April 30, 2011 and the Company has no effective registration statement in effect related to the Preferred A Warrant shares.    The Preferred A Warrants have similar round-down provisions as the Senior warrants, as a result of which the number of Preferred A Warrants was increased to 19,250,000 at an exercise price of $0.20 on December 28, 2010. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b) | Preferred B Option: Junior Note holders received an option to purchase up to 20,000 Series B convertible preferred shares for a stated value of $100 each until November 24, 2010, convertible at US$1.00 per common share (the “Preferred B Option”). In conjunction with the Senior Note financing, the Preferred B Option period was extended to May 24, 2011. The change in value of the options as a result of the modification has been included in the change in fair value recognized in net loss. At April 30, 2011, no Preferred B Options had been exercised. The Company may force the conversion of Series B preferred shares after 12 months from the date of issuance, provided: i) production from the Deerfield area is 3,000 barrels of oil in a 30 day period; ii) the common shares have traded at or above US$3.50 per share for the preceding 20 consecutive trading days; and iii) the daily average dollar trading volume has been in excess of US$1,500,000 per day for the same 20 day period. Should Series B preferred shares having a stated value of not less than US$1.8 million be issued, the holders of such shares will have the right to nominate one director to the board of directors of the Company. In conjunction with the exercise of the Preferred B Option, the Company will issue up to 1,000,000 warrants (the “Preferred B Warrants”). Each warrant allows the holder to purchase a common share at US$3.50 per share for a period of five years from issuance. After nine months from the date of issuance, a cashless conversion option is provided only with respect to warrant shares not included for unrestricted public resale in an effective registration statement on the date notice of exercise is given to the Company. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

| 11. | Derivatives - continued |
|-----|-------------------------|

|   |  The Preferred B Warrants have similar round-down provisions as the Senior warrants, as a result of which the conversion price of the Series B convertible preferred shares was reduced to $0.20 per share and the number of issuable Preferred B Warrants was increased to 17,500,000 at an exercise price of $0.20 at December 28, 2010.  On May 24, 2011, the Preferred B Option exercise period was extended to June 7, 2011. On June 7, 2011, 17,600 Preferred B Options were exercised for gross proceeds of $1.76 million and the remaining 2,400 Preferred B Options expired. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c) | Consulting Warrants: During 2010, the Company issued the warrants to consultants for professional services: |
|-----|------------------------------------------------------------------------------------------------------------------|

|              |   |               |      |   |           |   |        |   | Fair Value        |   |
|-------------------|--------|--------------------|-----------|--------|----------------|--------|-------------|--------|-------------------|--------|
| Date of Issue     |   | Number of Warrants |      |   | Exercise Price |   | Expiry Date |   | Issue Date        |   |   | April 302011 |   |
| July 30, 2010     |   |               | 720,000   |   |           | $      | 0.25        | (1)    | July 30, 2013     |   | $ | 81,510 |   |   | $ | 109,560 |   |
| December 28, 2010 |   |               | 2,000,000 |   |           | $      | 0.25        |   | December 28, 2013 |   |   | 85,300 |   |   |   | 381,820 |   |
|              |   |               | 2,720,000 |   |           |   |        |   |              |   | $ | 166,810 |   |   | $ | 491,380 |   |

|   | (1)On December 28, 2010, the number of warrants was increased from 360,000 to 720,000 and the exercise price was reduced from $0.50 to $0.25 per share pursuant to the terms described in note 10. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 12. | Share Capital: |
|-----|----------------|

| (a) | Issued Common Shares:  |
|-----|-----------------------------|

|                                                         |   | Number of Shares |      |   | Amount |   |
|--------------------------------------------------------------|--------|------------------|-----------|--------|--------|--------|
| May 2000, cash received from escrow share issuances          |   |             | 225,000   |   |   | $      | 109,688 |   |
| August 2001, cash received from private placement            |   |             | 183,750   |   |   |   | 132,212 |   |
| July 2004, cancellation of escrow shares                     |   |             | (225,000  | )      |   |   | (109,688 | ) |
| February 2005, cash received from private placement          |   |             | 450,000   |   |   |   | 3,658 |   |
| December 2006, cash received from private placement          |   |             | 2,350,000 |   |   |   | 2,348,198 |   |
| December 2006, debt settlement                               |   |             | 60,000    |   |   |   | 143,728 |   |
| January to March 2007, cash received from private placements |   |             | 3,587,355 |   |   |   | 18,812,977 |   |
| March 2007, issued for services                              |   |             | 37,500    |   |   |   | 772,247 |   |
| April 2007, acquisition of oil and gas assets                |   |             | 525,000   |   |   |   | 12,742,978 |   |
| May 2006 to April 2007, exercise of stock options            |   |             | 50,000    |   |   |   | 82,177 |   |
| May 2007 to November 2007, issued for services               |   |             | 37,500    |   |   |   | 782,434 |   |
| October 2007, acquisition of oil and gas assets              |   |             | 50,000    |   |   |   | 830,677 |   |
| October 2007, acquisition of oil and gas assets              |   |             | 475,000   |   |   |   | 7,955,559 |   |
| February 2008, conversion of exchange shares                 |   |             | 950,000   |   |   |   | 1,689,127 |   |
| May 2007 to April 2008, exercise of stock options            |   |             | 84,459    |   |   |   | 1,409,940 |   |
| May 2007 to April 2008, exercise of warrants                 |   |             | 672,602   |   |   |   | 11,147,811 |   |
| Share issue costs                                            |   |             | -         |   |   |   | (1,635,899 | ) |
| Balance, April 30, 2008                                      |   |             | 9,513,166 |   |   |   | 57,217,824 |   |

----

----

| 12. | Share Capital - continued |
|-----|---------------------------|

| May 2008, cash received from private placement |   |   | 2,675,000  |   |   |   | 15,907,637 |   |
|------------------------------------------------|--------|--------|------------|--------|--------|--------|------------|--------|
| June 2008, conversion of promissory notes      |   |   | 741,256    |   |   |   | 1,870,071  |   |
| July 2008, acquisition of oil and gas assets   |   |   | 10,000     |   |   |   | 37,038     |   |
| May 2008 to April 2009, issued for services    |   |   | 206,500    |   |   |   | 926,977    |   |
| May 2008 to April 2009, exercise of warrants   |   |   | 178,525    |   |   |   | 3,936,737  |   |
| Share issue costs                              |   |   | -          |   |   |   | (1,067,751 | )      |
| Balance, April 30, 2009                        |   |   | 13,324,447 |   |   |   | 78,828,533 |   |
| Shares issued for services                     |   |   | 4,500      |   |   |   | 7,638      |   |
| Balance, April 30, 2010                        |   |   | 13,328,947 |   |   |   | 78,836,171 |   |
| Conversion of Senior I Notes (note 10)         |   |   | 750,000    |   |   |   | 184,373    |   |
| Share issue costs                              |   |   | -          |   |   |   | (4,119     | )      |
| Balance, April 30, 2011                        |   |   | 14,078,947 |   |   | $      | 79,016,425 |   |

| (b) | Preferred A Shares: |
|-----|---------------------|

|                                                  |   | Number of Shares |   |   | Amount |   |
|-------------------------------------------------------|--------|------------------|--------|--------|--------|--------|
| Issued, August 28, 2009                               |   |             | 2,200  |   |   | $      | 2,200,000 |   |
| Preferred A Warrants and Preferred B Option (note 11) |   |             | -      |   |   |   | (462,235 | ) |
| Dividends                                             |   |             | -      |   |   |   | 218,795 |   |
| Issue costs                                           |   |             | -      |   |   |   | (75,298 | ) |
| Outstanding, April 30, 2010                           |   |             | 2,200  |   |   |   | 1,881,262 |   |
| Dividends                                             |   |             | -      |   |   |   | 82,274 |   |
| Outstanding, July 30, 2010                            |   |             | 2,200  |   |   |   | 1,963,536 |   |
| Deficit adjustment on shareholder transaction         |   |             | -      |   |   |   | 537,533 |   |
| Exchange for Junior notes (note 10)                   |   |             | (2,200 | )      |   |   | (2,501,069 | ) |
| Outstanding, April 30, 2011                           |   |             | -      |   |   | $      | - |   |

|   | Preferred A Shares On August 28, 2009, the Company issued 2,200 Series A convertible preferred shares (the “Preferred A Shares”), with a stated value of US$100 for gross proceeds of $2,200,000 and convertible into common shares at US$0.07 per common share. The Preferred A Shares carried a cumulative quarterly dividend of 5% payable in cash or, at the Company’s discretion, of 7.5% payable in additional Preferred A Shares. As at July 30, 2010, the Company had declared a total of $301,069 (April 30, 2010 - $218,795) of accumulated dividends. On July 30, 2010, the Company exchanged 2,200 Preferred A Shares and US$301,069 of accumulated dividends for $2,501,069 of Junior Notes through a transaction with existing shareholders. Dividends were calculated at 15% pursuant to the Preferred Share Subscription Agreement as the Company was in default on paying dividends as they came due on a quarterly basis. In conjunction with the exchange, the Company recorded a $537,533 distribution of accumulated deficit to shareholders for the difference between the $1,963,536 carrying value of the preferred shares and the $2,501,069 fair value of the convertible note on the exchange date. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

| 13. | Stock Based Compensation: |
|-----|---------------------------|

|                        |   | Number of |      |   | Weighted Avg.  |   |
|-----------------------------|--------|-----------|-----------|--------|----------------|--------|
|                        |   | Options   |      |   | Exercise Price |   |
| Outstanding, April 30, 2008 |   |      | 965,000   |   |           | $      | 8.10 |   |
| Granted                     |   |      | 647,300   |   |           |   | 2.70 |   |
| Forfeited                   |   |      | (410,100  | )      |           |   | (5.30 | ) |
| Cancelled                   |   |      | (454,350  | )      |           |   | (8.90 | ) |
| Outstanding, April 30, 2009 |   |      | 747,850   |   |           | $      | 4.10 |   |
| Granted                     |   |      | 413,200   |   |           |   | 1.40 |   |
| Forfeited                   |   |      | (91,250   | )      |           |   | (4.90 | ) |
| Outstanding, April 30, 2010 |   |      | 1,069,800 |   |           | $      | 3.00 |   |
| Granted                     |   |      | 1,302,000 |   |           |   | 0.50 |   |
| Expired                     |   |      | (213,500  | )      |           |   | (4.90 | ) |
| Forfeited                   |   |      | (304,000  | )      |           |   | (2.50 | ) |
| Cancelled                   |   |      | (450,000  | )      |           |   | (2.80 | ) |
| Outstanding, April 30, 2011 |   |      | 1,404,300 |   |           | $      | 0.60 |   |

----

----

| 13. | Stock Based Compensation - continued |
|-----|--------------------------------------|

|                  | 2011      | 2010    | 2009    |
|-----------------------|-----------|---------|---------|
| Fair value per option | $0.27     | $1.58   | $4.20   |
| Expected volatility   | 130%      | 214%    | 83%     |
| Risk-free rate        | 1.41%     | 2.57%   | 3.98%   |
| Forfeiture rate       | 15%       | 10%     | 20%     |
| Dividend rate         | 0%        | 0%      | 0%      |
| Expected life         | 3.4 years | 3 years | 4 years |

|                      | Options Outstanding |                         | Options Exercisable          |
|---------------------------|---------------------|------------------------------|------------------------------|
| Exercise Price            | Options             | Weighted Avg. Life Remaining | Weighted Avg. Exercise Price |   | Options | Weighted Avg. Exercise Price |
| $0.50                     | 1,302,000           | 3.2 years                    | $0.50                        |   | 772,500 | $0.50 |
| $1.50                     | 97,150              | 1.0 years                    | $1.50                        |   | 75,050 | $1.50 |
| $1.80                     | 5,000               | 2.7 years                    | $1.80                        |   | 2,500 | $1.80 |
| $6.20                     | 150                 | 1.1 years                    | $6.20                        |   | 150 | $6.20 |
|                      | 1,404,300           | 3.1 years                    | $0.60                        |   | 850,200 | $0.60 |
| Aggregate Intrinsic Value | $ 65,100            |                         |                         |   | $ 38,625 |   |

|                                        |      |           | Weighted Avg.     |
|---------------------------------------------|-----------|----------------|-------------------|
|                                        | Number of | Weighted Avg.  | Life Remaining    |
|                                        | Warrants  | Exercise Price | At April 30, 2011 |
| Outstanding, April 30, 2010                 | -         | $ -            | -                 |
| Granted                                     | 480,000   | 0.50           | 2.9 years         |
| Outstanding and exercisable, April 30, 2011 | 480,000   | $ 0.50         | 2.9 years         |
| Aggregate Intrinsic Value                   | $ 24,000  |           |              |

----

----

| 13. | Stock Based Compensation - continued |
|-----|--------------------------------------|

| 14. | Per Share Amounts: |
|-----|--------------------|

| 15. | General and Administrative Expenses: |
|-----|--------------------------------------|

|                       |   |       2011 |      |   |       2010 |   |      |       2009 |   |   | From Development Stage Inception on November 1, 2006 through April 30, 2011 |   |
|----------------------------|--------|---------------------------|-----------|--------|---------------------------|--------|-----------|---------------------------|--------|--------|-----------------------------------------------------------------------------|--------|
| Stock-based compensation:  |   |                      |      |   |                      |   |      |                      |   |   |                                                                        |   |
| Stock options              |   | $                         | 575,835   |   |                      | $      | 500,293   |                      |   | $      | 784,887                                                                     |   |   | $ | 15,979,894 |   |
| Compensation warrants      |   |                      | 152,010   |   |                      |   | -         |                      |   |   | -                                                                           |   |   |   | 152,010 |   |
| Consulting warrants        |   |                      | 166,810   |   |                      |   | -         |                      |   |   | -                                                                           |   |   |   | 1,614,816 |   |
| Shares issued for services |   |                      | -         |   |                      |   | 7,638     |                      |   |   | 222,533                                                                     |   |   |   | 1,955,486 |   |
| Less: capitalized portion  |   |                      | (9,495    | )      |                      |   | (50,846   | )                         |   |   | (472,486                                                                    | )      |   |   | (1,549,968 | ) |
|                       |   |                      | 885,160   |   |                      |   | 457,085   |                      |   |   | 534,934                                                                     |   |   |   | 18,152,238 |   |
|                       |   |                      |      |   |                      |   |      |                      |   |   |                                                                        |   |   |   |   |   |
| Salaries and benefits      |   |                      | 1,063,706 |   |                      |   | 1,401,257 |                      |   |   | 2,576,423                                                                   |   |   |   | 8,637,083 |   |
| Professional fees          |   |                      | 1,104,290 |   |                      |   | 460,101   |                      |   |   | 439,370                                                                     |   |   |   | 2,877,864 |   |
| Investor relations         |   |                      | 64,818    |   |                      |   | 45,177    |                      |   |   | 188,908                                                                     |   |   |   | 963,285 |   |
| Office and administration  |   |                      | 325,259   |   |                      |   | 938,534   |                      |   |   | 1,136,719                                                                   |   |   |   | 3,482,801 |   |
| Information technology     |   |                      | 44,364    |   |                      |   | 52,754    |                      |   |   | 213,229                                                                     |   |   |   | 469,970 |   |
| Less: capitalized portion  |   |                      | (180,537  | )      |                      |   | (161,459  | )                         |   |   | (1,043,033                                                                  | )      |   |   | (2,541,281 | ) |
|                       |   |                      | 2,421,900 |   |                      |   | 2,736,364 |                      |   |   | 3,511,616                                                                   |   |   |   | 13,889,722 |   |
|                       |   | $                         | 3,307,060 |   |                      | $      | 3,193,449 |                      |   | $      | 4,046,550                                                                   |   |   | $ | 32,041,960 |   |

----

----

| 16. | Income Taxes: |
|-----|---------------|

|                                    |   | 2011   |        |   | 2010   |   |       | 2009   |   |
|-----------------------------------------|--------|--------|-------------|--------|--------|--------|------------|--------|--------|
| Loss for the year                       |   |   |        |   |   |   |       |   |   |
| Canada                                  |   | $      | (13,027,198 | )      |   | $      | (4,355,736 | )      |   | $ | (1,785,482 | ) |
| U.S.                                    |   |   | (16,682,188 | )      |   |   | (3,594,623 | )      |   |   | (58,161,789 | ) |
|                                    |   |   | (29,709,386 | )      |   |   | (7,950,359 | )      |   |   | (59,947,271 | ) |
| Statutory tax rate                      |   |   | 27.5        | %      |   |   | 28.0       | %      |   |   | 29.0 | % |
| Expected income tax benefit             |   |   | (8,170,081  | )      |   |   | (2,226,101 | )      |   |   | (17,384,709 | ) |
| Increase (decrease) resulting from:     |   |   |        |   |   |   |       |   |   |   |   |   |
| Non-deductible stock-based compensation |   |   | 243,419     |   |   |   | 127,915    |   |   |   | 154,668 |   |
| Other non-deductible expenses           |   |   | 2,602,228   |   |   |   | 16,906     |   |   |   | 12,930 |   |
| Effect of changes in tax rates          |   |   | (1,182,836  | )      |   |   | (76,387    | )      |   |   | (3,459,889 | ) |
| Effect of U.S. operations               |   |   | 197,573     |   |   |   | (2,529,850 | )      |   |   | (2,390,660 | ) |
| Change in valuation allowance           |   |   | 6,309,697   |   |   |   | 4,687,517  |   |   |   | 23,067,660 |   |
|                                    |   | $      | -           |   |   | $      | -          |   |   | $ | - |   |

|                                           |   | 2011   |        |   | 2010   |   |        | 2009   |   |
|------------------------------------------------|--------|--------|-------------|--------|--------|--------|-------------|--------|--------|
| Net deferred income tax asset:                 |   |   |        |   |   |   |        |   |   |
| Oil and gas and administrative assets - Canada |   | $      | (337,824    | )      |   | $      | (356,868    | )      |   | $ | (145,269 | ) |
| Oil and gas and administrative assets - U.S.   |   |   | 20,524,918  |   |   |   | 16,230,207  |   |   |   | 11,397,956 |   |
| Operating losses - Canada                      |   |   | 3,654,294   |   |   |   | 3,250,256   |   |   |   | 2,552,917 |   |
| Operating losses - U.S.                        |   |   | 15,507,383  |   |   |   | 13,880,655  |   |   |   | 13,457,487 |   |
| Share issue costs                              |   |   | 198,663     |   |   |   | 211,746     |   |   |   | 73,220 |   |
| Unrealized loss on marketable securities       |   |   | 515,333     |   |   |   | 515,333     |   |   |   | 465,126 |   |
| Unrealized foreign exchange (gain) loss        |   |   | (878,640    | )      |   |   | (856,899    | )      |   |   | 385,476 |   |
|                                           |   |   | 39,184,127  |   |   |   | 32,874,430  |   |   |   | 28,186,913 |   |
| Less: valuation allowance                      |   |   | (39,184,127 | )      |   |   | (32,874,430 | )      |   |   | (28,186,913 | ) |
|                                           |   | $      | -           |   |   | $      | -           |   |   | $ | - |   |

----

----

| 16. | Income Taxes - continued |
|-----|--------------------------|

|       |   | Canada |       |   | U.S.   |   |
|------------|--------|--------|------------|--------|--------|--------|
| 2014       |   | $      | 154,800    |   |   | $      | - |   |
| 2015       |   |   | 73,700     |   |   |   | - |   |
| 2026       |   |   | 116,600    |   |   |   | - |   |
| 2027       |   |   | 1,687,700  |   |   |   | 1,738,600 |   |
| Thereafter |   |   | 12,584,400 |   |   |   | 42,568,400 |   |
| Total      |   | $      | 14,617,200 |   |   | $      | 44,307,000 |   |

| 17. | Supplemental Cash Flow Information: |
|-----|-------------------------------------|

|                                                                        |   |       2011 |   |   |       2010 |   |   |       2009 |   |   | From Development Stage Inception on November 1, 2006 through April 30, 2011 |   |
|-----------------------------------------------------------------------------|--------|---------------------------|--------|--------|---------------------------|--------|--------|---------------------------|--------|--------|-----------------------------------------------------------------------------|--------|
| Interest received                                                           |   | $                         | 1,163  |   |                      | $      | 6,073  |                      |   | $      | 135,190                                                                     |   |   | $ | 1,029,891 |   |
| Interest paid                                                               |   |                      | 50,083 |   |                      |   | -      |                      |   |   | -                                                                           |   |   |   | 50,083 |   |
| Income taxes paid                                                           |   |                      | -      |   |                      |   | -      |                      |   |   | -                                                                           |   |   |   | - |   |
| Oil and gas assets acquired through the issuance of common shares (note 12) |   |                      | -      |   |                      |   | -      |                      |   |   | -                                                                           |   |   |   | 21,566,252 |   |

| 18. | Related Party Transactions: |
|-----|-----------------------------|

| 19. | Segmented Information: |
|-----|------------------------|

|                           |   | Year ended April 30, 2011 |        |
|--------------------------------|--------|---------------------------|-------------|
|                           |   | Canada                    |        |   | USA |   |   | Consolidated |   |
| Revenue                        |   | $                         | 16,213      |   |   | $ | 1,565,963 |   |   | $ | 1,582,176 |   |
| Expenses                       |   |                      | 13,043,411  |   |   |   | 18,248,151 |   |   |   | 31,291,562 |   |
| Loss                           |   |                      | (13,027,198 | ) |   |   | (16,682,188 | ) |   |   | (29,709,386 | ) |
| Oil and gas assets             |   |                      | 1,303,158   |   |   |   | 16,672,672 |   |   |   | 17,975,830 |   |
| Administrative assets          |   |                      | 8,333       |   |   |   | 11,165 |   |   |   | 19,498 |   |
| Oil and gas asset additions    |   |                      | -           |   |   |   | 1,623,574 |   |   |   | 1,623,574 |   |
| Oil and gas asset impairment   |   |                      | -           |   |   |   | (12,848,677 | ) |   |   | (12,848,677 | ) |
| Administrative asset additions |   |                      | 3,054       |   |   |   | - |   |   |   | 3,054 |   |

----

----

| 19. | Segmented Information - continued |
|-----|-----------------------------------|

|                                    |   | Year ended April 30, 2010        |
|-----------------------------------------|--------|----------------------------------|
|                                    |   | Canada                           |   |   | USA |   |   | Consolidated |
| Revenue                                 |   | $                                | 4,224 |   |   | $ | 1,576,999 |   |   | $ | 1,581,223 |   |
| Expenses                                |   |                             | 4,359,960 |   |   |   | 5,171,622 |   |   |   | 9,531,582 |   |
| Loss                                    |   |                             | (4,355,736 | ) |   |   | (3,594,623 | ) |   |   | (7,950,359 | ) |
| Oil and gas assets                      |   |                             | 1,319,538 |   |   |   | 28,968,271 |   |   |   | 30,287,809 |   |
| Administrative assets                   |   |                             | 65,077 |   |   |   | 14,886 |   |   |   | 79,963 |   |
| Oil and gas asset additions             |   |                             | 1,515 |   |   |   | 783,499 |   |   |   | 785,014 |   |
| Oil and gas dispositions and recoveries |   |                             | (384,267 | ) |   |   | (1,976,741 | ) |   |   | (2,361,008 | ) |
| Oil and gas asset impairment            |   |                             | (55,612 | ) |   |   | (1,106,933 | ) |   |   | (1,162,545 | ) |
| Administrative asset additions          |   |                             | - |   |   |   | 7,401 |   |   |   | 7,401 |   |
|                                    |   |   Year ended April 30, 2009 |
|                                    |   | Canada                           |   |   | USA |   |   | Consolidated |
| Revenue                                 |   | $                                | 118,540 |   |   | $ | 16,650 |   |   | $ | 135,190 |   |
| Expenses                                |   |                             | 1,904,023 |   |   |   | 58,178,438 |   |   |   | 60,082,461 |   |
| Loss                                    |   |                             | (1,785,482 | ) |   |   | (58,161,789 | ) |   |   | (59,947,271 | ) |
| Oil and gas assets                      |   |                             | 1,529,053 |   |   |   | 26,767,798 |   |   |   | 28,296,851 |   |
| Administrative assets                   |   |                             | 188,503 |   |   |   | 9,337 |   |   |   | 197,840 |   |
| Oil and gas asset additions             |   |                             | 916,508 |   |   |   | 13,791,947 |   |   |   | 14,708,455 |   |
| Oil and gas asset impairment            |   |                             | - |   |   |   | (57,468,799 | ) |   |   | (57,468,799 | ) |
| Administrative asset additions          |   |                             | 27,151 |   |   |   | 9,736 |   |   |   | 36,887 |   |

| 20. | Financial Instruments: |
|-----|------------------------|

| April 30                                 |   | 2012   |      |   | 2013   |   |      | 2014   |   |   | 2015      |   |   | 2016   |      |
|------------------------------------------|--------|--------|-----------|--------|--------|--------|-----------|--------|--------|--------|-----------|--------|--------|--------|-----------|
| Cash and cash equivalents                |   | $      | 1,179,838 |   |   | $      | -         |   |   | $      | -         |   |   | $      | -         |   |   | $ | - |   |
| Cash in escrow                           |   |   | 658,000   |   |   |   | -         |   |   |   | -         |   |   |   | -         |   |   |   | - |   |
| Accounts receivable                      |   |   | 231,316   |   |   |   | -         |   |   |   | -         |   |   |   | -         |   |   |   | - |   |
| Long-term receivable                     |   |   | 100,000   |   |   |   | 194,862   |   |   |   | -         |   |   |   | -         |   |   |   | - |   |
|                                     |   | $      | 2,169,154 |   |   | $      | 194,862   |   |   | $      | -         |   |   | $      | -         |   |   | $ | - |   |
|                                     |   |   |      |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |   |   |
| April 30                                 |   |   | 2012      |   |   |   | 2013      |   |   |   | 2014      |   |   |   | 2015      |   |   |   | 2016 |   |
| Accounts payable and accrued liabilities |   | $      | 1,251,736 |   |   | $      | -         |   |   | $      | -         |   |   | $      | -         |   |   | $ | - |   |
| Interest payable                         |   |   | 505,696   |   |   |   | -         |   |   |   | -         |   |   |   | -         |   |   |   | - |   |
| Liability portion of convertible notes   |   |   | 1,626,243 |   |   |   | 3,293,928 |   |   |   | 1,746,092 |   |   |   | -         |   |   |   | - |   |
| Derivatives                              |   |   | -         |   |   |   | 1,568,910 |   |   |   | 4,588,990 |   |   |   | 3,219,700 |   |   |   | 5,122,294 |   |
|                                     |   | $      | 3,383,675 |   |   | $      | 4,862,838 |   |   | $      | 6,335,082 |   |   | $      | 3,219,700 |   |   | $ | 5,122,294 |   |

----

----

| 20. | Financial Instruments - continued |
|-----|-----------------------------------|

| (a) | Credit risk: Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations. As at April 30, 2010, the maximum credit exposure is the carrying amount of accounts receivable of $231,316 and the long-term receivable of $294,862 (2010 - accounts receivable $457,071; long-term receivable $307,620), each of which is receivable from a single counterparty. Both counterparties are active in the exploration for and extraction of oil and natural gas, and are therefore largely exposed to the same risks as the Company.  The majority of the Company’s cash and cash equivalents are held in US bank deposit accounts and the Company views credit risk on cash and cash equivalents as minimal.  The Company intends to minimize exposure to credit risk by only transacting with reputable counterparties.  There is a risk that the long term receivable will not be realized if the Company’s Marmaton and Grassy properties do not produce sufficient oil and thereby result in no gross overriding royalties being owed by the Company from which the receivable is recovered (note 6).  The Company did not provide for any doubtful accounts nor did it write-off any receivables during the years ended April 30, 2011, 2010 and 2009. The Company would only choose to write-off a receivable balance (as opposed to providing an allowance) after all reasonable avenues of collection had been exhausted.  As at April 30, 2011, the Company’s accounts receivable is aged between 30 and 60 days. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b) | Liquidity risk: Liquidity risk is the risk that the Company will encounter difficulty in paying obligations as they come due. The Company's financial liabilities consist of accounts payable and accrued liabilities. Accounts payable consists of invoices payable to trade suppliers for capital expenditures, field operating activities, and general corporate expenses. The Company processes invoices within a normal payment period.  The Company prepares operations and capital expenditure budgets which are regularly monitored and updated. As well, the Company utilizes authorizations for expenditures on projects to manage capital expenditures. As discussed, the Company will have to attract additional financing to be able to meet its obligations. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

| 20. | Financial Instruments - continued |
|-----|-----------------------------------|

| (c) | Commodity price risk: Market risk is the risk that changes in commodity prices, will affect the Company's oil sales, cash flows or the value of its financial instruments. The objective of commodity price risk management is to manage and control market risk exposures within acceptable limits, while maximizing returns.  The Company is exposed to changes in oil prices which impact its revenues and to changes in natural gas process which impact its operating expenses.  The Company does not utilize financial derivatives or other contracts to manage commodity price risks. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (d) | Foreign currency exchange rate risk: The Company is exposed to foreign currency fluctuations as it has cash, accounts receivable and accounts payable denominated in Canadian dollars. A 1% change in foreign exchange rates between the US and Canadian dollars would have resulted in a change of approximately $2,425 in the net loss in 2011 (2010 - $2,570). There are no exchange rate contracts in place. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (e) | Interest rate risk: Interest rate risk is the risk that future cash flows will fluctuate as a result of changes in market interest rates. Interest earned on cash and cash equivalents is at nominal rates and therefore, the Company does not consider interest rate risk to be significant. The Company has no variable interest-bearing financial liabilities as at April 30, 2011 and 2010. Interest rate risk on the long-term receivable is not considered significant. There are no interest rate swaps or financial contracts in place. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (f) | Share price risk: Share price risk is the risk that changes in the market price of the Company’s shares will affect the fair value of its derivatives. A 5% change in the market price of the Company’s shares would have resulted in a change of approximately $1,073,700 in the net loss (2010 ­- $94,000). |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 21. | Fair Value Measurements: |
|-----|--------------------------|

----

----

| 21. | Fair Value Measurements - continued |
|-----|-------------------------------------|

|                                    |   |            |       |   |             |   |       | Fair Value Measurements Using: |   |
|-----------------------------------------|--------|-----------------|------------|--------|------------------|--------|------------|--------------------------------|--------|
|                                    |   | Carrying Amount |       |   | Total Fair Value |   |       | Level 1 Inputs                 |   |   | Level 2Inputs |   |   | Level 3 Inputs |   |
| April 30, 2011                          |   |            |       |   |             |   |       |                           |   |   |   |   |   |   |   |
| Liability portion of convertible notes: |   |            |       |   |             |   |       |                           |   |   |   |   |   |   |   |
| Current portion                         |   | $               | 1,626,243  |   |             | $      | 2,049,760  |                           |   | $ | - |   |   | $ | 2,049,760 |   |   | $ | - |   |
| Long-term portion                       |   |            | 5,040,020  |   |             |   | 4,464,990  |                           |   |   | - |   |   |   | 4,464,990 |   |   |   | - |   |
|                                    |   | $               | 6,666,263  |   |             | $      | 6,514,750  |                           |   | $ | - |   |   | $ | 6,514,750 |   |   | $ | - |   |
|                                    |   |            |       |   |             |   |       |                           |   |   |   |   |   |   |   |   |   |   |   |   |
| April 30, 2011                          |   |            |       |   |             |   |       |                           |   |   |   |   |   |   |   |   |   |   |   |   |
| Derivatives:                            |   |            |       |   |             |   |       |                           |   |   |   |   |   |   |   |   |   |   |   |   |
| Consulting warrants                     |   | $               | 491,380    |   |             | $      | 491,380    |                           |   | $ | - |   |   | $ | - |   |   | $ | 491,380 |   |
| Senior I Notes                          |   |            | 1,631,850  |   |             |   | 1,631,850  |                           |   |   | - |   |   |   | - |   |   |   | 1,631,850 |   |
| Senior II Notes                         |   |            | 2,733,950  |   |             |   | 2,733,950  |                           |   |   | - |   |   |   | - |   |   |   | 2,733,950 |   |
| Junior Notes                            |   |            | 1,300,720  |   |             |   | 1,300,720  |                           |   |   | - |   |   |   | - |   |   |   | 1,300,720 |   |
| Preferred A Warrants                    |   |            | 3,219,700  |   |             |   | 3,219,700  |                           |   |   | - |   |   |   | - |   |   |   | 3,219,700 |   |
| Preferred B Option                      |   |            | 5,122,294  |   |             |   | 5,122,294  |                           |   |   | - |   |   |   | - |   |   |   | 5,122,294 |   |
|                                    |   | $               | 14,499,894 |   |             | $      | 14,499,894 |                           |   | $ | - |   |   | $ | - |   |   | $ | 14,499,894 |   |

|                 |   |            |      |   |             |   |      | Fair Value Measurements Using: |   |
|----------------------|--------|-----------------|-----------|--------|------------------|--------|-----------|--------------------------------|--------|
|                 |   | Carrying Amount |      |   | Total Fair Value |   |      | Level 1 Inputs                 |   |   | Level 2Inputs |   |   | Level 3 Inputs |   |
| April 30, 2010       |   |            |      |   |             |   |      |                           |   |   |   |   |   |   |   |
| Derivatives:         |   |            |      |   |             |   |      |                           |   |   |   |   |   |   |   |
| Preferred A Warrants |   | $               | 740,269   |   |             | $      | 740,269   |                           |   |   | - |   |   |   | - |   |   | $ | 740,269 |   |
| Preferred B Option   |   |            | 590,640   |   |             |   | 590,640   |                           |   |   | - |   |   |   | - |   |   |   | 590,640 |   |
|                 |   | $               | 1,330,909 |   |             | $      | 1,330,909 |                           |   | $ | - |   |   | $ | - |   |   | $ | 1,330,909 |   |

| 22. | Contingency and Contractual Obligations: |
|-----|------------------------------------------|

| (a) | Contingency:  In January 2010, the Company experienced a flood in its office premises as a result of a broken water pipe. There was significant damage to the premises rendering them unusable until remediation had been completed by the landlord. Pursuant to the lease contract, the Company has asserted that rent should be abated during the remediation process and accordingly, the Company has not paid rent since December 2009. During the remediation process, the Company engaged an independent environmental testing company to test for air quality and for the existence of other potentially hazardous conditions. The testing revealed the existence of potentially hazardous mould and the consultant provided specific written instructions for the effective remediation of the premises. During the remediation process, the landlord did not follow the consultant’s instructions and correct the potentially hazardous mould situation and subsequently in June 2010 gave notice and declared the premises to be ready for occupancy. The Company re-engaged the consultant to re-test the premises and the testing results again revealed the presence of potentially hazardous mould. The Company has determined that the premises are not fit for re-occupancy and considers the landlord to be in default of the lease and the lease terminated.    The landlord disputes the Company’s position and has given notice that it considers the Company to be in default of the lease for failure to re-occupy the premises. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

| 22. | Contingency and Contractual Obligations - continued |
|-----|-----------------------------------------------------|

|   | In addition, the landlord has claimed that the Company owes monthly rent for the premises from January 2010 to June 30, 2010 in the amount of $247,348 (Cdn$234,098) and has claimed that, as a result of the alleged default, pursuant to the terms of the lease, the Company owes three months accelerated rent in the amount of $114,837 (Cdn$108,685). The landlord has also asserted that the Company would be liable for an amount up to the full lease obligation of $1,596,329 (Cdn$1,510,816) which otherwise would have been due as follows: |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Year Ended April 30 |   |   |      |
|---------------------|--------|--------|-----------|
| 2011                |   | $      | 473,055   |   |
| 2012                |   |   | 473,055   |   |
| 2013                |   |   | 473,055   |   |
| 2014                |   |   | 177,164   |   |
| Thereafter          |   |   | -         |   |
| Total               |   | $      | 1,596,329 |   |

|   | To date, no legal action has been commenced by the landlord and the cost, if any, to the Company is not determinable. Accordingly, no amounts related to rent or the disputed lease obligation have been recorded in these financial statements. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b) | Severance Obligation: At April 30, 2011 pursuant to employment agreements with a senior officer, the Company is obligated to pay up to $206,080 (Cdn$195,040) under certain events around employment termination. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 23. | Subsequent Events: |
|-----|--------------------|

| (a) | On May 24, 2011, the Preferred B Option period was extended to June 7, 2011 (note 10). |
|-----|----------------------------------------------------------------------------------------|

| (b) | In June 2011, the Company raised $1.76 million pursuant to the exercise of 17,600 Preferred B Options and issued 15,399,125 Preferred B Warrants exercisable at $0.20 until June 7, 2016. The remaining 2,400 Preferred B Options expired unexercised. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c) | Effective June 20, 2011, the Company’s share capital was consolidated on a one-for-ten basis which has been reflected retrospectively throughout these consolidated financial statements. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 24. | Comparative Figures: |
|-----|----------------------|

| 25. | Reconciliation from Canadian GAAP to US GAAP: |
|-----|-----------------------------------------------|

----

----

| 25. | Reconciliation from Canadian GAAP to US GAAP - continued |
|-----|----------------------------------------------------------|

|                                                          |   | As at April 30, 2011 |         |   | As at April 30, 2010 |   |
|---------------------------------------------------------------|--------|----------------------|--------------|--------|----------------------|--------|
|                                                          |   | US GAAP              |         |   | Canadian GAAP        |   |   | US GAAP |   |   | Canadian GAAP |   |
|                                                          |   |                 |         |   |                 |   |   |   |   |   |   |   |
| Assets                                                        |   |                 |         |   |                 |   |   |   |   |   |   |   |
| Current assets                                                |   |                 |         |   |                 |   |   |   |   |   |   |   |
| Cash and cash equivalents                                     |   | $                    | 1,179,838    |   |                 | $      | 1,179,838 |   |   | $ | 150,005 |   |   | $ | 150,005 |   |
| Cash in escrow                                                |   |                 | 658,000      |   |                 |   | 658,000 |   |   |   | - |   |   |   | - |   |
| Accounts receivable                                           |   |                 | 231,316      |   |                 |   | 231,316 |   |   |   | 457,071 |   |   |   | 457,071 |   |
| Prepaid expenses and deposits                                 |   |                 | 92,196       |   |                 |   | 92,196 |   |   |   | 173,288 |   |   |   | 173,288 |   |
|                                                          |   |                 | 2,161,350    |   |                 |   | 2,161,350 |   |   |   | 780,364 |   |   |   | 780,364 |   |
| Oil and gas assets (note (a)(vii))                            |   |                 | 17,975,830   |   |                 |   | 16,782,655 |   |   |   | 30,287,809 |   |   |   | 24,011,678 |   |
| Administrative assets                                         |   |                 | 19,498       |   |                 |   | 19,498 |   |   |   | 79,963 |   |   |   | 79,963 |   |
| Reclamation deposits                                          |   |                 | 143,696      |   |                 |   | 143,696 |   |   |   | 140,815 |   |   |   | 140,815 |   |
| Long-term receivable                                          |   |                 | 294,862      |   |                 |   | 294,862 |   |   |   | 307,620 |   |   |   | 307,620 |   |
| Deferred transaction costs (note (a)(ix))                     |   |                 | 223,276      |   |                 |   | - |   |   |   | - |   |   |   | - |   |
|                                                          |   | $                    | 20,818,512   |   |                 | $      | 19,402,061 |   |   | $ | 31,596,571 |   |   | $ | 25,320,440 |   |
|                                                          |   |                 |         |   |                 |   |   |   |   |   |   |   |   |   |   |   |
| Liabilities and Shareholders’ Equity                    |   |                 |         |   |                 |   |   |   |   |   |   |   |   |   |   |   |
| Current liabilities                                           |   |                 |         |   |                 |   |   |   |   |   |   |   |   |   |   |   |
| Accounts payable and accrued liabilities                      |   | $                    | 1,251,736    |   |                 | $      | 1,251,736 |   |   | $ | 744,408 |   |   | $ | 744,408 |   |
| Interest payable                                              |   |                 | 505,696      |   |                 |   | 505,696 |   |   |   | - |   |   |   | - |   |
| Asset retirement obligations                                  |   |                 | 205,700      |   |                 |   | 205,700 |   |   |   | 245,657 |   |   |   | 245,657 |   |
| Current liability portion of convertible notes (note (a)(ix)) |   |                 | 1,626,243    |   |                 |   | 2,231,288 |   |   |   | - |   |   |   | - |   |
|                                                          |   |                 | 3,589,375    |   |                 |   | 4,194,420 |   |   |   | 990,065 |   |   |   | 990,065 |   |
| Asset retirement obligations                                  |   |                 | 521,636      |   |                 |   | 521,636 |   |   |   | 521,883 |   |   |   | 521,883 |   |
| Liability portion of convertible notes (note (a)(ix))         |   |                 | 5,040,020    |   |                 |   | 6,002,554 |   |   |   | - |   |   |   | - |   |
| Derivatives (note (a)(ix))                                    |   |                 | 14,499,894   |   |                 |   | - |   |   |   | 1,330,909 |   |   |   | - |   |
|                                                          |   |                 | 23,650,925   |   |                 |   | 10,718,610 |   |   |   | 2,842,857 |   |   |   | 1,511,948 |   |
|                                                          |   |                 |         |   |                 |   |   |   |   |   |   |   |   |   |   |   |
| Shareholders’ Deficit                                   |   |                 |         |   |                 |   |   |   |   |   |   |   |   |   |   |   |
| Common shares                                                 |   |                 | 79,016,425   |   |                 |   | 77,467,613 |   |   |   | 78,836,171 |   |   |   | 77,330,365 |   |
| Preferred A shares                                            |   |                 | -            |   |                 |   | - |   |   |   | 1,881,262 |   |   |   | 1,881,262 |   |
| Warrants and options on preferred shares                      |   |                 | -            |   |                 |   | 1,010,500 |   |   |   | - |   |   |   | 462,235 |   |
| Equity portion of convertible notes                           |   |                 | -            |   |                 |   | 817,608 |   |   |   |   |   |   |   |   |   |
| Contributed surplus                                           |   |                 | 54,341,320   |   |                 |   | 21,616,747 |   |   |   | 53,613,475 |   |   |   | 20,888,902 |   |
| Accumulated other comprehensive loss                          |   |                 | (272,156     | )      |                 |   | 500,027 |   |   |   | 11,615 |   |   |   | 578,686 |   |
| Accumulated deficit from prior operations                     |   |                 | (443,861     | )      |                 |   | (443,861 | ) |   |   | (443,861 | ) |   |   | (443,861 | ) |
| Accumulated deficit from development stage                    |   |                 | (135,474,141 | )      |                 |   | (92,285,183 | ) |   |   | (105,144,948 | ) |   |   | (76,889,097 | ) |
|                                                          |   |                 | (2,832,413   | )      |                 |   | 8,683,451 |   |   |   | 28,753,714 |   |   |   | 23,808,492 |   |
|                                                          |   | $                    | 20,818,512   |   |                 | $      | 19,402,061 |   |   | $ | 31,596,571 |   |   | $ | 25,320,440 |   |

----

----

| 25. | Reconciliation from Canadian GAAP to US GAAP - continued |
|-----|----------------------------------------------------------|

| As at April 30, 2011                                                    |   |
|-------------------------------------------------------------------------|--------|
|                                                                    |   | Common shares |   |   | Warrants and options on preferred shares |   |   | Equity portion of convertible notes |   |   | Contributed surplus |   |   | Accumulated other comprehensive loss |   |   | Accumulated deficit from development stage |   |
| US GAAP                                                                 |   | $ | 79,016,425 |   |   | $ | - |   |   | $ | - |   |   | $ | 54,341,320 |   |   | $ | (272,156 | ) |   | $ | (135,474,141 | ) |
| Adjustments for:                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Re-class deficit adjustment on related partyacquisitions (note (a)(i))  |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (16,231,971 | ) |
| Property acquisitions (note (a)(ii))                                    |   |   | (10,081,795 | ) |   |   | (19,512,150 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Stock-compensation transactions (note (a)(ii))                          |   |   | (799,945 | ) |   |   | (4,389,874 | ) |   |   | - |   |   |   | (7,407,376 | ) |   |   | - |   |   |   | - |   |
| Transfer on stock option exercise (note (a)(ii))                        |   |   | (1,168,781 | ) |   |   | - |   |   |   | - |   |   |   | 1,168,781 |   |   |   | - |   |   |   | - |   |
| Transfer on warrant exercise (note (a)(ii))                             |   |   | (6,963,180 | ) |   |   | 6,963,180 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Transfer on unit exercise (note (a)(ii))                                |   |   | (194,978 | ) |   |   | - |   |   |   | - |   |   |   | 194,978 |   |   |   | - |   |   |   | - |   |
| Transfer on warrant expiry (note (a)(ii))                               |   |   | - |   |   |   | 25,214,191 |   |   |   | - |   |   |   | (25,214,191 | ) |   |   | - |   |   |   | - |   |
| Stock-based compensation on stock options (note (a)(ii))                |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 11,565,539 |   |
| Less capitalized stock-based compensation (note (a)(ii))                |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (878,764 | ) |
| Stock-based compensation on shares issued for services (note (a)(ii))   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 237,872 |   |
| Value of warrants on private placements (note (a)(iii))                 |   |   | 9,742,112 |   |   |   | (8,275,347 | ) |   |   | - |   |   |   | (1,466,765 | ) |   |   | - |   |   |   | - |   |
| Reduced interest expense on convertible promissory notes (note (a)(iv)) |   |   | 100,011 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (100,011 | ) |
| Re-measure exchangeable shares (note (a)(v))                            |   |   | 7,860,750 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (18,387,365 | ) |
| Revenue, net of costs (note (a)(vi))                                    |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 5,099,785 |   |
| Reduced impairment (note (a)(vii))                                      |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 51,115,723 |   |
| Derivatives (notes (a)(viii))                                           |   |   | - |   |   |   | 473,129 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 7,829,357 |   |
| Derivatives (notes (a)(ix))                                             |   |   | - |   |   |   | 537,371 |   |   |   | 817,608 |   |   |   | - |   |   |   | - |   |   |   | 2,384,350 |   |
| Reduced interest on convertible notes (note (a)(ix))                    |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 554,443 |   |
| Exercise of convertible notes (note (a)(ix))                            |   |   | (43,006 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Foreign exchange translation                                            |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 772,183 |   |   |   | - |   |
| Canadian GAAP                                                           |   | $ | 77,467,613 |   |   | $ | 1,010,500 |   |   | $ | 817,608 |   |   | $ | 21,616,747 |   |   | $ | 500,027 |   |   | $ | (92,285,183 | ) |

----

----

| 25. | Reconciliation from Canadian GAAP to US GAAP - continued |
|-----|----------------------------------------------------------|

| As at April 30, 2010                                                    |   |
|-------------------------------------------------------------------------|--------|
|                                                                    |   | Common shares |   |   | Preferred A shares |   |   | Warrants and options on preferred shares |   |   | Contributed surplus |   |   | Accumulated other comprehensive loss |   |   | Accumulated deficit from development stage |   |
| US GAAP                                                                 |   | $ | 78,836,171 |   |   | $ | 1,881,262 |   |   | $ | - |   |   | $ | 53,613,475 |   |   | $ | 11,615 |   |   | $ | (105,144,948 | ) |
| Adjustments for:                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Re-class deficit adjustment on related partyacquisitions (note (a)(i))  |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (16,231,971 | ) |
| Property acquisitions (note (a)(ii))                                    |   |   | (10,081,795 | ) |   |   | - |   |   |   | (19,512,150 | ) |   |   | - |   |   |   | - |   |   |   | - |   |
| Stock-compensation transactions (note (a)(ii))                          |   |   | (799,945 | ) |   |   | - |   |   |   | (4,389,874 | ) |   |   | (7,407,376 | ) |   |   | - |   |   |   | - |   |
| Transfer on stock option exercise (note (a)(ii))                        |   |   | (1,168,781 | ) |   |   | - |   |   |   | - |   |   |   | 1,168,781 |   |   |   | - |   |   |   | - |   |
| Transfer on warrant exercise (note (a)(ii))                             |   |   | (6,963,180 | ) |   |   | - |   |   |   | 6,963,180 |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Transfer on unit exercise (note (a)(ii))                                |   |   | (194,978 | ) |   |   | - |   |   |   | - |   |   |   | 194,978 |   |   |   | - |   |   |   | - |   |
| Transfer on warrant expiry (note (a)(ii))                               |   |   | - |   |   |   | - |   |   |   | 25,214,191 |   |   |   | (25,214,191 | ) |   |   | - |   |   |   | - |   |
| Stock-based compensation on stock options (note (a)(ii))                |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 11,565,539 |   |
| Less capitalized stock-based compensation (note (a)(ii))                |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (878,764 | ) |
| Stock-based compensation on shares issued for services (note (a)(ii))   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 237,872 |   |
| Value of warrants on private placements (note (a)(iii))                 |   |   | 9,742,112 |   |   |   | - |   |   |   | (8,275,347 | ) |   |   | (1,466,765 | ) |   |   | - |   |   |   | - |   |
| Reduced interest expense on convertible promissory notes (note (a)(iv)) |   |   | 100,011 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (100,011 | ) |
| Re-measure exchangeable shares (note (a)(v))                            |   |   | 7,860,750 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (18,387,365 | ) |
| Revenue, net of costs (note (a)(vi))                                    |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 2,474,262 |   |
| Reduced impairment (note (a)(vii))                                      |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 48,747,123 |   |
| Fair value adjustments on derivatives (note (a)(viii))                  |   |   | - |   |   |   | - |   |   |   | 462,235 |   |   |   | - |   |   |   | - |   |   |   | 829,166 |   |
| Foreign exchange translation                                            |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 567,071 |   |   |   | - |   |
| Canadian GAAP                                                           |   | $ | 77,330,365 |   |   | $ | 1,881,262 |   |   | $ | 462,235 |   |   | $ | 20,888,902 |   |   | $ | 578,686 |   |   | $ | (76,889,097 | ) |

----

----

| 25. | Reconciliation from Canadian GAAP to US GAAP - continued |
|-----|----------------------------------------------------------|

|                                                                      |   | Year Ended April 30 |        |
|---------------------------------------------------------------------------|--------|---------------------|-------------|
|                                                                      |   | 2011                |        |   | 2010 |   |   | 2009 |   |
| US GAAP loss for the year                                                 |   | $                   | (29,709,386 | ) |   | $ | (7,950,359 | ) |   | $ | (59,947,271 | ) |
| Adjustments for:                                                          |   |                |        |   |   |   |   |   |   |   |   |   |
| Increased stock-based compensation expense (note (a)(ii))                 |   |                | -           |   |   |   | - |   |   |   | (78,040 | ) |
| Increased interest expense on convertible promissory notes (note (a)(iv)) |   |                | -           |   |   |   | - |   |   |   | (8,528 | ) |
| Revenue, net of costs (note (a)(vi))                                      |   |                | 2,625,523   |   |   |   | 2,474,262 |   |   |   | - |   |
| Reduced impairment (note (a)(vii))                                        |   |                | 2,368,600   |   |   |   | - |   |   |   | 27,525,464 |   |
| Fair value adjustments on derivatives (note (a)(viii) & (ix))         |   |                | 9,395,435   |   |   |   | 829,166 |   |   |   | - |   |
| Reduced interest expense on convertible notes (note (a)(ix))              |   |                | 554,443     |   |   |   | - |   |   |   | - |   |
| Total adjustments                                                         |   |                | 14,944,001  |   |   |   | 3,303,428 |   |   |   | 27,438,896 |   |
| Canadian GAAP comprehensive loss for the year                             |   | $                   | (14,765,385 | ) |   | $ | (4,646,931 | ) |   | $ | (32,508,375 | ) |
|                                                                      |   |                |        |   |   |   |   |   |   |   |   |   |
| Canadian GAAP net loss per share - basic and diluted                      |   | $                   | (1.10       | ) |   | $ | (0.35 | ) |   | $ | (2.49 | ) |
| Weighted average number of shares outstanding - basic and diluted         |   |                | 13,387,166  |   |   |   | 13,325,545 |   |   |   | 13,035,892 |   |

| (a) | Adjustments: |
|-----|--------------|

| i) | There is a difference in the measurement basis used to record related party transactions under Canadian GAAP compared to U.S. GAAP when the transacting entities are not under common control. Under Canadian GAAP, related party transactions are recorded at their carrying amounts unless independent evidence exists to support the exchange amount. Since independent evidence did not exist for the exchange amounts of the related party acquisitions of Trinity, Deerfield Missouri and the assets of Deerfield Kansas, they were recorded at their carrying amounts. Under U.S. GAAP, only related party transactions between transacting entities under common control are recorded at their carrying amount. As common control did not exist between MegaWest and Trinity, Deerfield Missouri and Deerfield Kansas, these acquisitions were recorded at their exchange amounts. As a result, the $16,231,971 difference between the carrying amount and transaction amount at April 30, 2008 was re-classified from oil and gas assets under U.S. GAAP to deficit under Canadian GAAP. There were no related party transactions of this nature during the years ended April 30, 2009, 2010 and 2011. |
|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ii) | There is a difference in determining the fair value of shares issued for certain stock-based transactions under Canadian GAAP and U.S. GAAP if the market for the Company's shares is not active and liquid. Under Canadian GAAP, if the market for the Company's shares is not active and liquid, fair value is established using valuation techniques that include recent arm's length market transactions. Under U.S. GAAP, regulatory interpretation requires the use of quoted market prices as fair value. In January 2008, the Company’s market for the shares became active and liquid. As a result, this GAAP difference is no longer applicable to share-based transactions occurring after January 2008. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | As a result of this GAAP difference, the amount recorded for oil and gas acquisitions prior to January 2008 was lower under Canadian GAAP for the portion of consideration comprised of common shares ($10,081,795) and warrants ($19,512,150). |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

| 25. | Reconciliation from Canadian GAAP to US GAAP - continued As a result of this GAAP difference, when stock options, warrants and unit rights issued prior to January 2008 are exercised, there was an adjustment under Canadian GAAP related to the transfer from contributed surplus and warrants to share capital. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | During the years ended April 30, 2011 and 2010, there were no options or warrants exercised. |
|--------|---------|----------------------------------------------------------------------------------------------|

|   | • | During the year ended April 30, 2009, 1,900,000 incentive warrants were exercised resulting in an reduction of $2,362,223 for the transfer to share capital from warrants. During the years ended April 30, 2008 and 2007, 1,525,000 options were exercised resulting in a reduction of $1,168,781 for the transfer to share capital from contributed surplus, 6,925,000 warrants were exercised resulting in a reduction of $4,600,957 for the transfer to share capital from warrants and 180,000 unit rights were exercised resulting in reduction of $194,978 for the transfer to share capital from contributed surplus. |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | As a result of this GAAP difference, when warrants issued prior to January 2008 expired, there was an adjustment under Canadian GAAP related to the transfer from warrants to contributed surplus. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | During the year ended April 30, 2009, 35,607,623 warrants expired resulting in a reduction of $25,214,191 for the transfer to contributed surplus from warrants. |
|--------|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | As a result of this GAAP difference, when stock options or shares were issued as compensation prior to January 2008, there was an adjustment under Canadian GAAP related to the amount recorded as stock-based compensation. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | During the year ended April 30, 2009, stock-based compensation on stock options was reduced by $78,040. In years prior to April 30, 2009, stock-based compensation on stock options was reduced by $11,487,499 of which $878,764 was capitalized to oil and gas assets. Stock-based compensation on shares issued for services was reduced by $237,872. |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| iii) | The value ascribed to the share purchase warrants issued in connection with the unit private placements is adjusted under Canadian GAAP. Under Canadian GAAP, if the market for the Company's shares is not active and liquid, fair value is established using valuation techniques that include recent arm's length market transactions. Under U.S. GAAP, the OTC exchange quoted price is used for the market price input in the option pricing model. This resulted in an adjustment of $8,275,347 to share capital from warrants and $1,466,765 to share capital from contributed surplus for the stock-based issue costs. |
|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | In January 2008, the Company’s market for the shares became active and liquid. As a result, this GAAP difference is no longer applicable to share-based transactions occurring after January 2008. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| iv) | Prior to the conversion of convertible promissory notes in June 2008, there was a difference in the treatment of the notes under Canadian GAAP compared to U.S. GAAP. Under U.S. GAAP, the convertible promissory notes are classified as liability, and interest is accrued at the contractual rate. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

| 25. | Reconciliation from Canadian GAAP to US GAAP - continued |
|-----|----------------------------------------------------------|

|   | Under Canadian GAAP, the conversion feature of the notes is valued using an option pricing model and classified as shareholders' equity. The residual amount is classified as a liability and accretion is recorded to bring the liability component to its face value at maturity using the effective interest rate method.    This resulted in a reduction of interest expense and the re-classification of the liability component for the conversion feature to equity. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| v) | There is a difference in the classification and re-measurement of exchangeable shares under Canadian GAAP compared to U.S. GAAP. Under U.S. GAAP, the exchangeable shares components are not separated, rather they are accounted for as temporary equity. The exchangeable shares are measured at fair value on issuance and for each reporting period, the exchangeable shares are re-measured to their redemption value, and the resulting difference is recognized as an adjustment to accumulated deficit. |
|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Under Canadian GAAP, exchangeable shares are split between the equity and liability components. The equity component of the exchangeable shares is valued using an option pricing model and classified as shareholders' equity. The residual amount is classified as a liability at its fair value.  This resulted in a $10,526,515 reduction of oil and gas assets and a $7,860,750 increase of share capital and a $18,387,365 reduction of accumulated deficit. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| vi) | Production revenue and costs during the development stage are included as part of oil and gas assets under Canadian GAAP. Under U.S. GAAP, production revenue and related costs are charged to income as if the Company was already in the production stage. The reclassification of revenue, net of costs, resulted in a decrease in oil and gas assets and a charge to the consolidated statement of operations. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                  |   | Year Ended April 30 |       |
|-----------------------|--------|---------------------|------------|
|                  |   | 2011                |       |   | 2010 |   |   | 2009 |   |
| Production revenue    |   | $                   | 1,565,963  |   |   | $ | 1,575,150 |   |   | $ | - |   |
| Operating costs       |   |                | (3,470,746 | ) |   |   | (3,955,084 | ) |   |   | - |   |
|                  |   |                | (1,904,783 | ) |   |   | (2,379,934 | ) |   |   | - |   |
| Depletion             |   |                | (720,740   | ) |   |   | (94,328 | ) |   |   | - |   |
| Revenue, net of costs |   | $                   | (2,625,523 | ) |   | $ | (2,474,262 | ) |   | $ | - |   |

|   | This GAAP difference had the following impact on cash flows: |
|--------|--------------------------------------------------------------|

| Year ended April 30, 2011               |   | U.S. GAAP |       |   | GAAP Adjustment |   |       | Canadian GAAP |   |
|-----------------------------------------|--------|-----------|------------|--------|-----------------|--------|------------|---------------|--------|
| Cash flows used by operating activities |   | $         | (3,716,843 | )      |            | $      | 1,904,783  |          |   | $ | (1,812,060 | ) |
| Cash flows used by investing activities |   | $         | (1,367,825 | )      |            | $      | (1,904,783 | )             |   | $ | (3,272,608 | ) |

| Year ended April 30, 2010                      |   | U.S. GAAP |       |   | GAAP Adjustment |   |       | Canadian GAAP |   |
|------------------------------------------------|--------|-----------|------------|--------|-----------------|--------|------------|---------------|--------|
| Cash flows used by operating activities        |   | $         | (4,941,145 | )      |            | $      | 2,379,934  |          |   | $ | (2,561,211 | ) |
| Cash flows from (used by) investing activities |   | $         | 1,475,848  |   |            | $      | (2,379,934 | )             |   | $ | (904,086 | ) |

----

----

| 25. | Reconciliation from Canadian GAAP to US GAAP - continued |
|-----|----------------------------------------------------------|

| vii) | As described in notes (a)(i), (ii), (iv), (v) and (vi), there have been adjustments in the values attributed to oil and gas assets relating to certain share capital and related party transactions. |
|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | As at April 30, 2011 and in prior years, the fair value of oil and gas assets was determined to be the same for Canadian GAAP and U.S. GAAP for all projects, with the exception of the Missouri project. As a result, impairment was reduced under Canadian GAAP in 2011, 2009 and 2008. Oil and Gas Assets: |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| As at April 30                                                                         |   | 2011   |        |   | 2010   |   |
|----------------------------------------------------------------------------------------|--------|--------|-------------|--------|--------|--------|
| US GAAP:                                                                               |   | $      | 17,975,830  |   |   | $      | 30,287,809 |   |
| Adjustments for:                                                                       |   |   |        |   |   |   |   |   |
| Measuring oil and gas assets at exchange amounts for related party acquisitions (a)(i) |   |   | (16,231,971 | )      |   |   | (16,231,971 | ) |
| Re-measure exchange shares (a)(ii)                                                     |   |   | (10,081,795 | )      |   |   | (10,081,795 | ) |
| Re-measure exchange warrants (a)(ii)                                                   |   |   | (19,512,150 | )      |   |   | (19,512,150 | ) |
| Equity portion of exchangeable shares (a)(ii)                                          |   |   | (10,526,615 | )      |   |   | (10,526,615 | ) |
| Additional capitalized stock-based compensation (a)(v)                                 |   |   | (878,764    | )      |   |   | (878,764 | ) |
| Revenue, net of costs (a)(vi)                                                          |   |   | 5,099,785   |   |   |   | 2,474,262 |   |
| Reduced impairment                                                                     |   |   | 51,115,723  |   |   |   | 48,747,123 |   |
| Foreign exchange translation                                                           |   |   | (177,388    | )      |   |   | (266,221 | ) |
| Canadian GAAP                                                                          |   | $      | 16,782,655  |   |   | $      | 24,011,678 |   |

| viii) | There is a difference in the classification and measurement of warrants and options on preferred shares under U.S. GAAP compared to Canadian GAAP. Under U.S. GAAP, warrants and options on preferred shares are a derivative classified as a liability when their terms include a round-down provision. The Company issued warrants and options on preferred shares in August 2009 which are measured at fair value on issuance and for each reporting period, they are re-measured. The resulting difference is recognized as an adjustment to the consolidated statement of operations. |
|-------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Under Canadian GAAP, warrants and options on preferred shares are valued on the date of issuance using an option pricing model and classified as shareholders’ equity. This resulted in a reclassification from liability to equity of $473,129 (April 30, 2010 - $462,235) and a fair value reduction of $7,829,357 (April 30, 2010 - $829,166) credited to the consolidated statement of operations. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ix) | There is a difference in the classification and measurement of the conversion feature of convertible notes and warrants under U.S. GAAP compared to Canadian GAAP. Under U.S. GAAP, the conversion feature and warrants are a derivative classified as a liability when their terms include a down-round provision. The Company issued convertible notes and warrants during the year ended April 30, 2011 for which the conversion feature and warrants are measured at fair value on issuance and for each reporting period, they are re-measured. The resulting difference is recognized as an adjustment to the consolidated statement of operations. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

| 25. | Reconciliation from Canadian GAAP to US GAAP - continued |
|-----|----------------------------------------------------------|

|   | Under Canadian GAAP, the conversion feature and warrants are valued on the date of issuance using an option pricing model and classified as shareholders’ equity.  In addition, under U.S. GAAP, transaction costs are reported as a deferred asset and amortized to expense over the term of the convertible notes. Under Canadian GAAP, convertible note transaction costs are reported as an offset to the liability portion of convertible notes and recognized as an expense in the consolidated statement of operations using the effective interest rate method.    These differences resulted in: |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | A reclassification from liability to equity and a fair value reduction of $2,384,350 credited to the consolidated statement of operations; |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | A $817,608 adjustment to the equity portion of convertible notes and a $537,371 adjustment to equity for the value of warrants; |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------|

|   | • | A $1,567,579 net increase to the liability portion of convertible notes for a $2,385,921 increase on the reallocation of liability and equity components of the notes, offset by the $223,276 reclassification of deferred transaction cost asset and an additional $40,623 for the difference in amortization of transaction costs and a $554,443 reduction in interest and accretion expense in the consolidated statement of operations. |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | A decrease of $43,006 to share capital for the partial conversion of convertible notes. |
|--------|---------|-----------------------------------------------------------------------------------------|

| (b) | Other disclosures required by Canadian GAAP:  Capital disclosures: The Company’s objective is to have a sufficient working capital to maintain financial flexibility and to sustain the future development of the business. In order to maintain financial flexibility, the Company may from time to time issue shares and adjust its capital spending to manage current and projected capital levels. To assess its financial strength, the Company continually monitors its working capital, which is calculated as follows: |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| As at April 30               |   | 2011   |       |   | 2010   |   |
|------------------------------|--------|--------|------------|--------|--------|--------|
| Current assets               |   | $      | 2,161,350  |   |   | $      | 780,364 |   |
| Current liabilities          |   |   | 4,194,420  |   |   |   | 990,065 |   |
| Working capital (deficiency) |   | $      | (2,033,070 | )      |   | $      | (209,701 | ) |

|   | The Company monitors its forecasted working capital on a monthly basis. The Company prepares annual capital expenditure budgets, which are updated as necessary depending on varying factors including current and forecast prices, successful capital deployment and general industry conditions. The annual and updated budgets are approved by the board of directors.  The Company’s share capital is not subject to external restrictions. There were no changes to the Company’s approach to capital management during the year. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

| 26. | Supplemental Information on Oil and Gas Operations (Unaudited): |
|-----|-----------------------------------------------------------------|

| Oil (MBbls)                          |   | 2011   |   |   | 2010   |   |   | 2009   |   |
|--------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|                                 |   |   |   |   |   |   |   |   |   |
| Proved reserves as at May 1          |   |   | 445    |   |   |   | 79     |   |   |   | 45 |   |
| Extensions and discoveries           |   |   | 46     |   |   |   | -      |   |   |   | 43 |   |
| Dispositions                         |   |   | -      |   |   |   | (3     | )      |   |   | - |   |
| Production                           |   |   | (28    | )      |   |   | (32    | )      |   |   | (9 | ) |
| Revisions of prior estimates         |   |   | -      |   |   |   | 401    |   |   |   | - |   |
| Total Proved reserves as at April 30 |   |   | 463    |   |   |   | 445    |   |   |   | 79 |   |

----

----

| 26. | Supplemental Information on Oil and Gas Operations (Unaudited) - continued |
|-----|----------------------------------------------------------------------------|

| Oil (MBbls)                          |   |   | 2011   |   |   |   | 2010   |   |   |   | 2009   |   |
|--------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|                                 |   |   |   |   |   |   |   |   |   |   |   |   |
| Proved developed producing           |   |   | 191    |   |   |   | 191    |   |   |   | -      |   |
| Non-producing                        |   |   | -      |   |   |   | -      |   |   |   | 34     |   |
| Proved undeveloped                   |   |   | 272    |   |   |   | 254    |   |   |   | 45     |   |
| Total Proved reserves as at April 30 |   |   | 463    |   |   |   | 445    |   |   |   | 79     |   |

| Capitalized Costs Related to Oil and Gas Assets |   | 2011   |        |   | 2010   |   |        | 2009   |   |
|-------------------------------------------------|--------|--------|-------------|--------|--------|--------|-------------|--------|--------|
|                                            |   |   |        |   |   |   |        |   |   |
| Proved properties                               |   | $      | 10,474,051  |   |   | $      | 9,630,780   |   |   | $ | 2,958,979 |   |
| Unproved properties                             |   |   | 105,123,129 |   |   |   | 104,692,582 |   |   |   | 107,996,621 |   |
|                                            |   |   | 115,597,180 |   |   |   | 114,323,362 |   |   |   | 110,955,600 |   |
| Less: accumulated impairment                    |   |   | (98,143,411 | )      |   |   | (85,294,734 | )      |   |   | (84,187,801 | ) |
| Less: accumulated depletion                     |   |   | (816,555    | )      |   |   | (95,815     | )      |   |   | - |   |
|                                            |   | $      | 16,637,214  |   |   | $      | 28,932,813  |   |   | $ | 26,767,799 |   |
|                                            |   |   |        |   |   |   |        |   |   |   |   |   |
|                                            |   |   |        |   |   |   |        |   |   |   |   |   |
| Costs incurred in Oil and Gas Activities:       |   |   | 2011        |   |   |   | 2010        |   |   |   | 2009 |   |
|                                            |   |   |        |   |   |   |        |   |   |   |   |   |
| Development                                     |   | $      | 1,623,574   |   |   | $      | 779,457     |   |   | $ | 13,131,400 |   |
| Exploration                                     |   |   | -           |   |   |   | -           |   |   |   | - |   |
|                                            |   | $      | 1,623,574   |   |   | $      | 779,457     |   |   | $ | 13,131,400 |   |

----

----

| 26. | Supplemental Information on Oil and Gas Operations (Unaudited) - continued |
|-----|----------------------------------------------------------------------------|

|   | • | Future production will include production not only from proved properties, but may also include production from probable and possible reserves; |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Future production of oil and natural gas from proved properties may differ from reserves estimated; |
|--------|---------|-----------------------------------------------------------------------------------------------------|

|   | • | Future production rates may vary from those estimated; |
|--------|---------|--------------------------------------------------------|

|   | • | Future rather than average first-day-of-the-month prices during the previous 12-month period and costs as at the balance sheet date will apply; |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Economic factors such as changes to interest rates, income tax rates, regulatory and fiscal environments and operating conditions cannot be determined with certainty; |
|--------|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Future estimated income taxes do not take into account the effects of future exploration expenditures; and |
|--------|---------|------------------------------------------------------------------------------------------------------------|

|   | • | Future development and asset retirement obligations may differ from those estimated. |
|--------|---------|--------------------------------------------------------------------------------------|

| Future cash flows relating to proved reserves: |   | 2011   |       |   | 2010   |   |        | 2009   |   |
|------------------------------------------------|--------|--------|------------|--------|--------|--------|-------------|--------|--------|
|                                           |   |   |       |   |   |   |        |   |   |
| Future cash inflows                            |   | $      | 26,338,000 |   |   | $      | 26,291,000  |   |   | $ | 3,425,000 |   |
| Future operating costs                         |   |   | (9,686,000 | )      |   |   | (10,672,000 | )      |   |   | (2,004,000 | ) |
| Future development costs                       |   |   | (3,345,000 | )      |   |   | (3,488,000  | )      |   |   | (889,000 | ) |
| Future asset retirement costs                  |   |   | (141,000   | )      |   |   | (139,000    | )      |   |   | (60,000 | ) |
| Future income taxes                            |   |   | -          |   |   |   | -           |   |   |   | - |   |
| Future net cash flows                          |   |   | 13,166,000 |   |   |   | 11,992,000  |   |   |   | 472,000 |   |
| 10% discount factor                            |   |   | (3,225,000 | )      |   |   | (3,286,000  | )      |   |   | (139,000 | ) |
| Standardized measure                           |   | $      | 9,941,000  |   |   | $      | 8,706,000   |   |   | $ | 333,000 |   |

----

----

| 26. | Supplemental Information on Oil and Gas Operations (Unaudited) - continued |
|-----|----------------------------------------------------------------------------|

|                                                             |   |   |       |   |   |   |       |   |   |   |      |   |
|------------------------------------------------------------------|--------|--------|------------|--------|--------|--------|------------|--------|--------|--------|-----------|--------|
| Reconciliation of future cash flows relating to proved reserves: |   |   | 2011       |   |   |   | 2010       |   |   |   | 2009      |   |
|                                                             |   |   |       |   |   |   |       |   |   |   |      |   |
| Undiscounted value as as at May 1                                |   | $      | 11,992,000 |   |   | $      | 472,000    |   |   | $      | 256,000   |   |
| Extensions and discoveries                                       |   |   | 1,308,100  |   |   |   | -          |   |   |   | 1,075,000 |   |
| Dispositions                                                     |   |   | -          |   |   |   | (17,924    | )      |   |   | -         |   |
| Production                                                       |   |   | (1,904,800 | )      |   |   | (2,379,900 | )      |   |   | (230,000  | )      |
| Revisions of prior volume estimates                              |   |   | -          |   |   |   | 10,806,300 |   |   |   | -         |   |
| Revisions of pricing                                             |   |   | 1,770,700  |   |   |   | 3,111,524  |   |   |   | (629,000  | )      |
| Undiscounted value as at April 30                                |   |   | 13,166,000 |   |   |   | 11,992,000 |   |   |   | 472,000   |   |
| 10% discount factor                                              |   |   | (3,225,000 | )      |   |   | (3,286,000 | )      |   |   | (139,000  | )      |
| Standardized measure                                             |   | $      | 9,941,000  |   |   | $      | 8,706,000  |   |   | $      | 333,000   |   |

----