The summarized financial data set forth in the table below is derived from and should be read in conjunction with our audited financial statements for the period from inception (October 19, 2004) to year ended December 31, 2007, including the notes to those financial statements which are included in this Annual Report. The following discussion should be read in conjunction with our audited financial statements and the related notes that appear elsewhere in this Annual Report. The following discussion contains forward-looking statements that

reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward looking statements. Factors that could cause or contribute to such differences include, but are not limited to those discussed below and elsewhere in this Annual Report, particularly in the section entitled "Risk Factors". Our audited financial statements are stated in United States Dollars and are prepared in accordance with United States Generally Accepted Accounting Principles.

We are an exploration stage company and have not generated any revenue to date. The following table sets forth selected financial information for the periods indicated.

RESULTS OF OPERATION

                                     FISCAL YEAR ENDED      FOR THE PERIOD FROM
                                       DECEMBER 31            OCTOBER 19, 2004
                                      2007 AND 2006            (INCEPTION) TO
                                                              DECEMBER 31, 2007
                               _________________________    ____________________

General and                    $817,021      $3,918,002           $4,962,778
Administrative Expenses
    Investor relations            9,120         112,744              162,074
    expenses
    Consulting expenses         189,991         346,992              628,458
    Management fees             312,990         311,707              624,697
    Impairment of oil and         -0-         1,273,410            1,273,410
    gas  properties
    Management fees               -0-         1,527,170            1,527,170
    -stock based
    compensation
    Office and general          156,639         176,884              356,744
Professional                    148,281         169,095              390,225
Fees
Net Loss                      ($817,021)    ($3,918,002)         ($4,962,778)

We have incurred recurring losses to date. Our financial statements have been prepared assuming that we will continue as a going concern and, accordingly, do not include adjustments relating to the recoverability and realization of assets and classification of liabilities that might be necessary should we be unable to continue in operation.

We expect we will require additional capital to meet our long term operating requirements. We expect to raise additional capital through, among other things, the sale of equity or debt securities.

FISCAL YEAR ENDED DECEMBER 31, 2007 COMPARED TO FISCAL YEAR ENDED DECEMBER 31,
2006.

Our net loss for fiscal year ended December 31, 2007 was ($817,021) compared to a net loss of ($3,918,002) during fiscal year ended December 31, 2006 (a decrease of $3,100,981). During fiscal year ended December 31, 2007 and 2006, we did not generate any revenue.

During fiscal year ended December 31, 2007, we incurred general and administrative expenses of $817,021 compared to $3,918,002 incurred during fiscal year ended December 31, 2006 (a decrease of $3,100,981). These general and administrative expenses incurred during fiscal year ended December 31, 2007 consisted of: (i) consulting fees of $189,991 (2006: $346,992); (ii) investor relations of $9120 (2006: $112,744); (iii) management fees of $312,990 (2006:
$311,707); (iv) office and general of $156,639 (2006: $176,884); (v) professional fees of $148,281 (2006: $169,095); (vi) management fees - stock based compensation of $-0- (2006: 1,527,170); and (vii) impairment of oil and gas properties of $-0- (2006: $1,273,410).

During fiscal year ended December 31, 2007, we did not incur any management fees
- stock based compensation relating to the valuation of stock options granted to our officers and directors. We also did not record any impairment of oil and gas properties during fiscal year ended December 31, 2007. Thus, general and administrative expenses incurred during fiscal year ended December 31, 2007 compared to fiscal year ended December 31, 2006 decreased primarily due to the non-incurrence of management fees - stock based compensation and no impairment of oil and gas properties. General and administrative expenses generally include corporate overhead, financial and administrative contracted services, marketing, and consulting costs.

Consulting fees decreased during fiscal year ended December 31, 2007 due to decrease in use of contractual services. Of the $817,021 incurred as general and administrative expenses during fiscal year ended December 31, 2007, we incurred consulting expenses of $189,991 payable to International Market Trend, Inc. ("IMT"). In addition, IMT advanced us $6,000 during fiscal year ended December 31, 2007. As of December 31, 2007, we owed IMT $56,873, which is unsecured and non-interest bearing and has no definite repayment terms. Effective March 24, 2008, we settled an aggregate $86,873 with IMT by the issuance of 434,366 shares of our restricted common stock at $0.20 per share. An officer and director of IMT is also one of our shareholders.

Of the $817,021 incurred as general and administrative expenses during fiscal year ended December 31, 2007, an aggregate of $312,990 was incurred payable to our officers and directors in management fees. We also incurred additional compensation to our Chief Geologist and Operations Manager in accordance with certain contractual arrangements that in the event we acquire an oil and gas property which was directly introduced to us by either our Chief Geologist or Operations Manager, we will assign up to a 1.5% overriding royalty interest. Therefore, during fiscal year ended December 31, 2007, we recorded additional compensation of $1,739, which is the estimated cost of royalty interests earned during the period. See "Item 10. Executive Compensation."

Our net loss during fiscal year ended December 31, 2007 was ($817,021) or ($0.03) per share compared to a net loss of ($3,918,002) or ($0.14) per share during fiscal year ended December 31, 2006. The weighted average number of shares outstanding was 29,814,905 for fiscal year ended December 31, 2007 compared to 28,811,306 for fiscal year ended December 31, 2006.

LIQUIDITY AND CAPITAL RESOURCES

FISCAL YEAR ENDED DECEMBER 31, 2007

As at fiscal year ended December 31, 2007, our current assets were $33,989 and our current liabilities were $2,718,691, which resulted in a working capital deficiency of ($2,684,702). As at fiscal year ended December 31, 2007, current assets were comprised of: (i) $16,098 in cash; and (ii) $17,891 in prepaid expenses and other. As at fiscal year ended December 31, 2007, current liabilities were comprised of: (i) $389,612 in accounts payable and accrued liabilities; and (ii) $1,570,079 due to related parties; and (iii) $759,000 in drilling advances payable.

As at fiscal year ended December 31, 2007, our total assets were $1,758,091 comprised of: (i) $33,989 in current assets; and (ii) $1,724,102 in unproven oil and gas properties. The increase in total assets during fiscal year ended December 31, 2007 from fiscal year ended December 31, 2006 was primarily due to recording of drilling costs relating to the Boggs #1 well.

As at fiscal year ended December 31, 2007, our total liabilities were $2,718,691 comprised entirely of current liabilities. The increase in liabilities during fiscal year ended December 31, 2007 from fiscal year ended December 31, 2006 was primarily due to the increase in amounts due to related parties and in amounts payable and accrued liabilities and drilling advances payable. See " - Material Commitments."

Stockholders' deficit increased from ($143,579) for fiscal year ended December 31, 2006 to ($960,600) for fiscal year ended December 31, 2007.

CASH FLOWS FROM OPERATING ACTIVITIES

We have not generated positive cash flows from operating activities. For fiscal year ended December 31, 2007, net cash flows used in operating activities was ($385,194), consisting primarily of a net loss of ($817,021). Net cash flows used in operating activities was adjusted by $269,877 to reconcile accounts payable and accrued liabilities, $191,086 to reconcile costs due to related parties, and $29,136 to reconcile prepaid expenses and other. For fiscal year ended December 31, 2006, net cash flows used in operating activities was ($839,051), consisting primarily of a net loss of ($3,918,002), and adjusted by $1,527,170 in stock based compensation, $1,273,410 in impairment of oil and gas properties, $200,000 to reconcile costs due to related parties, $64,043 to reconcile accounts payable and accrued liabilities, and $28,083 to reconcile amounts due to related parties.

CASH FLOWS FROM INVESTING ACTIVITIES

For fiscal year ended December 31, 2007, net cash flows used in investing activities was ($1,479,032) consisting of oil and gas property expenditures. For fiscal year ended December 31, 2006, net cash flows used in investing activities was ($903,393) for the acquisition of oil and gas properties.

CASH FLOWS FROM FINANCING ACTIVITIES

We have financed our operations primarily from either advancements or the issuance of equity and debt instruments. For fiscal year ended December 31, 2007, net cash flows provided from financing activities was $1,874,500 compared to $1,741,158 for fiscal year ended December 31, 2006. Cash flows from financing activities for fiscal year ended December 31, 2007 consisted primarily of $759,000 in drilling advances and $1,115,500 in advances from related parties compared to $1,416,158 in proceeds on sale of common stock and $325,000 in advances from related parties for fiscal year ended December 31, 2006.

We expect that working capital requirements will continue to be funded through a combination of our existing funds and further issuances of securities. Our working capital requirements are expected to increase in line with the growth of our business.

PLAN OF OPERATION AND FUNDING

Existing working capital, further advances and debt instruments, and anticipated cash flow are expected to be adequate to fund our operations over the next six months. We have no lines of credit or other bank financing arrangements. Generally, we have financed operations to date through the proceeds of the private placement of equity and debt instruments. In connection with our business plan, management anticipates additional increases in operating expenses and capital expenditures relating to: (i) oil and gas operating properties; (ii) possible drilling initiatives on current properties and future properties; and
(iii) future property acquisitions. We intend to finance these expenses with further issuances of securities, and debt issuances. Thereafter, we expect we will need to raise additional capital and generate revenues to meet long-term operating requirements. Additional issuances of equity or convertible debt securities will result in dilution to our current shareholders. Further, such securities might have rights, preferences or privileges senior to our common stock. Additional financing may not be available upon acceptable terms, or at all. If adequate funds are not available or are not available on acceptable terms, we may not be able to take advantage of prospective new business endeavors or opportunities, which could significantly and materially restrict our business operations.

During fiscal year ended December 31, 2007, we did not engage in any private placement offerings. However, during February 2008, we engaged in a private placement offering under Regulation S of the Securities Act pursuant to which we received gross proceeds of $1,515,214, of which all consisted of settlement of debt relating to amounts previously advanced to us by one of our shareholders and related accrued interest. And effective March 24, 2008, we also settled an aggregate $917,123 in debt by the issuance of 4,585,616 shares of our restricted common stock at $0.20 per share.

MATERIAL COMMITMENTS

During fiscal year ended December 31, 2007, one of our shareholders advanced an aggregate of $1,130,500 to us. As at December 31, 2006, an aggregate of $325,500 was already owing to this shareholder, which is subject to interest at the rate of 8% per annum and has no definite repayment terms. During fiscal year ended December 31, 2007, an aggregate of $65,000 resulting from proceeds received on disposal of the Peters Ranch Lease was utilized to offset the aggregate amount due and owing to the shareholder. Also add the $25,000 settlement by transferring Railroad bonds owed by the company to the shareholder. Thus, as of December 31, 2007, an aggregate of $1,365,500 was due and owing and accrued interest totaled $66,456.

Subsequently, during January 2008, an additional advance was made by this same shareholder to us for an aggregate amount of $1,512,214 due and owing. This amount was assigned by the shareholder to various assignees and settled pursuant to the issuance of 7,576,068 shares of our restricted common stock at $0.20 per share. See "Item 5. Market for Common Equity and Related Stockholder Matters and Small Business Issuer Purchases of Equity Securities - Recent Sales of Unregistered Securities."

PURCHASE OF SIGNIFICANT EQUIPMENT

We do not intend to purchase any significant equipment during the next twelve months.

OFF-BALANCE SHEET ARRANGEMENTS

As of the date of this Annual Report, we do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.

GOING CONCERN

The independent auditors' report accompanying our December 31, 2007 and December 31, 2006 financial statements contains an explanatory paragraph expressing substantial doubt about our ability to continue as a going concern. The financial statements have been prepared "assuming that we will continue as a going concern," which contemplates that we will realize our assets and satisfy our liabilities and commitments in the ordinary course of business.

RECENT ACCOUNTING PRONOUNCEMENTS

In March 2008, the FASB issued SFAS No. 161, DISCLOSURES ABOUT DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES ("SFAS 161"). SFAS 161 is intended to improve financial reporting about derivative instruments and hedging activities by requiring enhanced disclosures to enable investors to better understand their effects on an entity's financial position, financial performance, and cash flows. SFAS 161 achieves these improvements by requiring disclosure of the fair values of derivative instruments and their gains and losses in a tabular format. It also provides more information about an entity's liquidity by requiring disclosure of derivative features that are credit risk-related. Finally, it requires cross-referencing within footnotes to enable financial statement users to locate important information about derivative instruments. SFAS 161 will be

effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, will be adopted by the Company beginning in the first quarter of 2009. The Company does not expect there to be any significant impact of adopting SFAS 161 on its financial position, cash flows and results of operations.

In February 2007, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 159, THE FAIR VALUE OPTION FOR FINANCIAL
ASSETS AND FINANCIAL LIABILITIES - INCLUDING AN AMENDMENT OF FASB STATEMENT NO.
115 ("SFAS No. 159"). This statement permits entities to choose to measure many financial instruments and certain other items at fair value. The objective is to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. This Statement is expected to expand the use of fair value measurement, which is consistent with the Board's long-term measurement objectives for accounting for financial instruments. This statement is effective as of the beginning of our first fiscal year that begins after November 15, 2007, although earlier adoption is permitted. As of December 31, 2007, we have not adopted this statement and management has not determined the effect that adopting this statement would have on our financial position or results of operations.

In December 2007, the FASB issued SFAS No. 160, NONCONTROLLING INTEREST IN CONSOLIDATED FINANCIAL STATEMENTS, AN AMENDMENT OF ARB NO. 51 ("SFAS No. 160"), which will change the accounting and reporting for minority interests, which will be recharacterized as noncontrolling interests and classified as a component of equity within the consolidated balance sheets. SFAS No. 160 is effective as of the beginning of an entity's first fiscal year beginning on or after December 15, 2008. Earlier adoption is prohibited. Management has not determined the effect that adopting this statement would have on our financial position or results of operations.

In December 2007, the FASB issued SFAS No. 141 (Revised 2007), BUSINESS COMBINATIONS ("SFAS No. 141R"). SFAS No. 141R will change the accounting for business combinations. Under SFAS No. 141R, an acquiring entity will be required to recognize all the assets acquired and liabilities assumed in a transaction at the acquisition-date fair value with limited exceptions. SFAS No. 141R will change the accounting treatment and disclosure for certain specific items in a business combination. SFAS No. 141R applies prospectively to business combinations for which the acquisition date is on or after the beginning of the entity's first annual reporting period beginning on or after December 15, 2008. Accordingly, any business combinations completed by us prior to January 1, 2009 will be recorded and disclosed following existing GAAP. Management has not determined the effect that adopting this statement would have on our financial position or results of operations.

In September 2006, FASB issued SFAS No. 157, FAIR VALUE MEASURE ("SFAS No. 157"). This Statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles (GAAP), expands disclosures about fair value measurements, and applies under other accounting pronouncements that require or permit fair value measurements. SFAS No. 157 does not require any new fair value measurements. However, the FASB anticipates that for some entities, the application of SFAS No. 157 will change current practice. SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, which for us is the fiscal year beginning

January 1, 2008. We are currently evaluating the impact of adopting SFAS No. 157 but do not expect that it will have a significant effect on its financial position or results of operations.

In September 2006, the FASB issued SFAS No. 158, EMPLOYERS' ACCOUNTING FOR DEFINED BENEFIT PENSION AND OTHER POSTRETIREMENT PLANS "SFAS No. 158". This Statement requires an employer to recognize the over funded or under funded status of a defined benefit post retirement plan (other than a multiemployer plan) as an asset or liability in its statement of financial position, and to recognize changes in that funded status in the year in which the changes occur through comprehensive income. SFAS No. 158 is effective for fiscal years ending after December 15, 2006. The Company has determined that the adoption of this standard did not have any impact on the Company's results of operations or financial position.

In June 2006, FASB issued Interpretation No. 48, ACCOUNTING FOR UNCERTAINTY IN INCOME TAXES-AN INTERPRETATION OF FASB STATEMENT NO. 109 ("FIN 48"). This Interpretation clarifies the accounting for uncertainty in income taxes recognized in an enterprise's financial statements in accordance with FASB No. 109, "ACCOUNTING FOR INCOME TAXES." This Interpretation prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. This Interpretation also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. This Interpretation is effective for fiscal years beginning after December 15, 2006. We have determined that the adoption of FIN 48 did not have any material impact on our results of operations or financial position.