ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULT OF OPERATIONS.

This following information specifies certain forward-looking statements of management of the company. Forward-looking statements are statements that estimate the happening of future events are not based on historical fact. Forward-looking statements may be identified by the use of forward-looking terminology, such as "may", "shall", "will", "could", "expect", "estimate", "anticipate", "predict", "probable", "possible", "should", "continue", or similar terms, variations of those terms or the negative of those terms. The forward-looking statements specified in the following information have been compiled by our management on the basis of assumptions made by management and considered by management to be reasonable. Our future operating results, however, are impossible to predict and no representation, guaranty, or warranty is to be inferred from those forward-looking statements.

The assumptions used for purposes of the forward-looking statements specified in the following information represent estimates of future events and are subject to uncertainty as to possible changes in economic, legislative, industry, and other circumstances. As a result, the identification and interpretation of data and other information and their use in developing and selecting assumptions from and among reasonable alternatives require the exercise of judgment. To the extent that the assumed events do not occur, the outcome may vary substantially from anticipated or projected results, and, accordingly, no opinion is expressed on the achievability of those forward-looking statements. No assurance can be given that any of the assumptions relating to the forward-looking statements specified in the following information are accurate, and we assume no obligation to update any such forward-looking statements.

Our Background
Friendly Energy Exploration was formed under the laws of the State of Nevada on January 7, 1993 under the name Eco-Systems Marketing. Eco-Systems subsequently changed its name to Rama Financial Corporation. Amendments to the Articles of Incorporation were filed changing the corporate name to Friendly Energy Corporation and then, on March 4, 2008, to Friendly Energy Exploration. Friendly Energy Exploration, from its inception in 1993 to 2005, was engaged primarily in establishing itself as an electric service provider to California customers. Friendly Energy Exploration changed its business focus in February 2005 to pursuing oil and gas development opportunities.

Our Business
Friendly Energy Exploration was inactive from 2002 to February 2005, when the company began the process of identifying potential oil and gas prospects for development. The primary focus is on property in established oil fields to minimize any potential risk. We currently hold interests in an oil well and in two oil field prospects in Central Oklahoma.

Our Oil and Gas Properties
Asher Prospect Friendly Energy Exploration drilled and completed a 4,500 foot deep oil well in central Oklahoma through its wholly owned subsidiary, Friendly Energy Services, Inc. (FES). FES owns a 37.5% working interest in the well. The location is on the Asher Prospect, a development/exploratory prospect, located on the western edge of the giant St. Louis Oil Field.
West Peach Creek Prospect Friendly Energy Exploration is planning to drill a 5,400 foot deep well in central Oklahoma through its wholly owned subsidiary, Friendly Energy Services, Inc. (FES). If the geophysicist and operator each purchase a 10% working interest, as expected, then FES will own an 80% working interest in the well. The location is on the West Peach Creek Prospect, a development/exploratory prospect, located on the western edge of the giant St. Louis Oil Field.

Liquidity and Capital Resources.
For period ended March 31, 2008, we had total assets of $482,739, compared to $483,184 total assets for the period ending December 31, 2007. The decrease in assets was mainly due to deferred salaries. At March 31, 2008, we had current liabilities of $1,071,083 which was represented by accounts payable, payroll liabilities, judgment payable, deferred salaries, interest payable and loan payable to related parties. At December 31, 2007 we had current liabilities of $987,943. The increase in liabilities was due primarily to deferred salaries. At March 31, 2008, we had a working capital deficiency of $588,345 compared to $504,759 at December 31, 2007.

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We do not believe that our current cash resources will be able to maintain our current operations for an extended period of time. We will be required to raise additional funds or arrange for additional financing over the next 12 months to adhere to our development schedule. No assurance can be given, however, that we will have access to additional cash in the future, or that funds will be available on acceptable terms to satisfy our working capital requirements. If we are not able to arrange for additional funding or if our officers, directors and shareholders stop advancing funds to us, we may be forced to make other arrangements for financing such as loans or entering into strategic alliances. We have not identified any alternative sources of financing.

Results of Operations

We realized revenue from the Asher #1 oil well of $5,035 during the three month period ended March 31, 2008. During this same period, the loss from operations was $71,086 as compared to the same three month period in 2007 the loss was $145,786. This decrease in loss was due primarily to there being no stock based compensation in the three month period ending March 31, 2008. From inception to March 31, 2008, Friendly Energy Exploration has incurred cumulative net losses of $4,285,274. Because we are not generating any significant revenues, our only external source of liquidity is the sale of our capital stock and any advances from officers, directors or shareholders.

Our Plan of Operation for the Next Twelve Months

We anticipate that we will need to raise additional capital within the next 12 months in order to continue as a going concern. The Company is in the process of raising capital to fund the development of future wells. To the extent that additional capital is raised through the sale of equity or equity- related securities, the issuance of such securities could result in dilution of stockholders. There can be no assurance that additional funding will be available on favorable terms, if at all. If adequate funds are not available within the next 12 months, we may be required to curtail our operations significantly or to obtain funds through entering into arrangements with collaborative partners or others that may require us to relinquish rights to certain of our assets that we would not otherwise relinquish.

Friendly Energy Exploration does anticipate some expenditures within the next 12 months for new acquisitions. The Company may elect to raise funds for potential drilling through equity financing or possible joint ventures and participation agreements. If Friendly Energy Exploration is successful in raising anticipated funds the company anticipates a significant change in the number of its employees within the next 12 months.