The following updates information as to our financial condition and plan of operation provided in our Annual Report on Form 10-K for the fiscal year ended December 31, 2007. The following also analyzes our results of operations for nine month periods ended September 30, 2008 and September 30, 2007.

Except as discussed below, a discussion of our past financial results is not pertinent to the business plan of the Company on a going forward basis, due to the change in our business which occurred upon consummation of the merger on March 20, 2007.

Cautionary Statement Concerning Forward-Looking Statements

This Management's Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements regarding future events and our future results that are subject to the safe harbors created under the Securities Act of 1933 (the "Securities Act") and the Securities Exchange Act of 1934 (the "Exchange Act"). All statements other than statements of historical facts included in this report regarding our financial position, business strategy, plans and objectives of management for future operations, industry conditions, and indebtedness covenant compliance are forward-looking statements. When used in this report, forward-looking statements are generally accompanied by terms or phrases such as "estimate," "project," "predict," "believe," "expect," "anticipate," "target," "plan," "intend," "seek," "goal," "will," "should," "may" or other words and similar expressions that convey the uncertainty of future events or outcomes. Items contemplating or making assumptions about, actual or potential future sales, market size, collaborations, and trends or operating results also constitute such forward-looking statements.

Forward-looking statements involve inherent risks and uncertainties, and important factors (many of which are beyond our Company's control) that could cause actual results to differ materially from those set forth in the forward-looking statements, including the following, general economic or industry conditions, nationally and/or in the communities in which our Company conducts business, changes in the interest rate environment, legislation or regulatory requirements, conditions of the securities markets, our ability to raise capital, changes in accounting principles, policies or guidelines, financial or political instability, acts of war or terrorism, other economic, competitive, governmental, regulatory and technical factors affecting our Company's operations, products, services and prices.

We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. Accordingly, results actually achieved may differ materially from expected results in these statements. Forward-looking statements speak only as of the date they are made. You should consider carefully the statements in the section entitled "Item 1A. Risk Factors" and other sections of our Annual Report on Form 10-K for the fiscal year ended December 31, 2007, which describe factors that could cause our actual results to differ from those set forth in the forward-looking statements. Our Company does not undertake, and specifically disclaims, any obligation to update any forward-looking statements to reflect events or circumstances occurring after the date of such statements.

Overview and Outlook

We are a growth-oriented independent energy company engaged in the acquisition, exploration, exploitation and development of oil and natural gas properties, and have focused our activities primarily on projects based in the Rocky Mountain Region of the United States, specifically the Williston Basin. We have targeted specific prospects and began drilling for oil in the Williston Basin region in the fourth fiscal quarter of 2007. As of November 4, 2008, we have completed 28 successful discoveries, consisting of 26 targeting the Bakken formation and 2 targeting a Red River Structure. As of November 6, 2008, we are participating in the drilling of 15 Bakken and Three Fork/Sanish wells. As of November 6, 2008, approximately 170 sections containing Northern's acreage has been included in permitted or docketed-for-permit drilling locations.

The Company participates on a heads up basis proportionate to its working interest in a declared drilling unit. More specifically, we pay for the drilling costs based on our working interest percentage and receive revenue from the oil and gas production based on the working interest percentage, minus landowner royalties, which typically range from 12% to 20%. Although to this point we have participated with only minority interests ranging from 1% to 37%, we expect to participate in the drilling of incrementally higher working interest drilling units, eventually operating our substantial inventory of high working interest drilling units with a range of 40% to 100% ownership.

We control approximately 65,000 net acres in the growing North Dakota Bakken Play. This exposes us to 101 net drilling locations based on 640 acre spacing units. To be more specific, if we drill a well and participate with a 25% working interest, this counts towards the total as a quarter of one well. We control approximately 68 spacing units where we own in excess of 40% of the acreage, this gives us a substantial inventory of potential drilling locations that we could drill and operate on our own timing. To drill our complete inventory of 101 net drilling locations we expect to participate in approximately 450 gross wells. As of November 6, 2008, we have developed approximately 2% of our North Dakota Bakken position.

We expect to participate in approximately 60 gross oil wells in 2008 and very early 2009 with an average working interest of 8% yielding approximately four net wells. Based on the current pace of development, we expect to fully hold our Bakken acreage by production by 2011. Subsequent to this, we expect down spacing to yield significantly more net oil wells. We expect our position to have the potential to yield approximately 50 million gross barrels of oil. This is based on assumptions of 101 net wells and 500,000 barrels of recoverable oil per well. Operators have stated a range of approximately 250,000 to 900,000 barrels of recoverable oil. Our assumption of 500,000 barrels of recoverable oil per well was derived from reported results from our operating partners and reservoir engineering data from our producing wells. The pace of development and our assumptions are subject to change and it is possible that results may not be as favorable as we expect. However we may also experience substantially higher reserves due to secondary recovery and enhanced completion techniques. Based on currently planned wells, we expect to exit 2008 at a run rate of approximately 1,100 gross barrels of daily oil production. After paying landowner royalties ranging from 12% to 20% this equates to approximately 900 barrels of daily production net to us.

At $65 dollar oil prices, our target exit rate of 900 barrels per day will produce a run rate of approximately $21 million in annualized cash flows entering 2009 if we were to stop drilling. We expect this number to grow substantially through 2009 as we continue to add production. Any fluctuation in the per barrel price of oil, the actual daily production from our wells or the number of wells in production entering 2009 would correspondingly increase or decrease our actual annualized cash flow at any point in time. For instance, in the event that the price of oil decreases by ten percent from $65 per barrel, our annualized cash flows entering 2009 would equal approximately $19.2 million. Conversely, in the event that the price of oil increases by ten percent from $65 per barrel, our annualized cash flows entering 2009 would equal approximately $23.4 million.

As an exploration company, our business strategy is to identify and exploit resources in and adjacent to existing or indicated producing areas that can be quickly developed and put in production at low cost based on the activity of larger drillers in the area. We also intend to take advantage of our expertise in aggressive land acquisition to develop exploratory projects with attractive growth potential in focus areas and to participate with other companies in those areas to explore for oil and natural gas using state-of-the-art three-dimensional (3-D) seismic technology. We believe our competitive advantage lies in our ability to acquire property in the most exciting new plays in a nimble and efficient fashion. We are focused on low overhead, our expected cash expense burn rate is approximately $2 million for fiscal year 2008. We believe we are in a position to most efficiently exploit and identify high production oil and gas properties. We intend to continue to actively pursue the acquisition of properties that fit our profile.

We currently control the rights to mineral leases on approximately 96,354 net acres of land. Our principal assets are located in the Williston Basin region of the northern United States and Yates County, New York, and include the following primary positions as of September 30, 2008:

? Approximately 21,354 net acres located in Sheridan County, Montana, representing a stacked pay prospect;

? Approximately 25,000 net acres located in Mountrail County North Dakota, within and surrounding to the north, south and west the Parshall Field currently being developed by EOG Resources and others to target the Bakken Shale;

? Approximately 10,000 net acres located in Burke and Divide Counties of North Dakota, in which we are targeting the Winnepegosis and Bakken Shales on acreage in close proximity to recent discoveries by Continental Resources and others in the formation;

? Approximately 25,000 net acres in and around Marathon Oil production in Dunn County, North Dakota; and

? Approximately 10,000 net acres located in the "Finger Lakes" region of Yates County, New York, in which we are targeting natural gas production from the Trenton/Black River, Marcellus and Queenstown-Medina formations.

We have also completed other miscellaneous, non material, acreage acquisitions in North Dakota and Montana.

Results of Operations for the fiscal year ended December 31, 2007 and the nine months ended September 30, 2008.

The Company is in the early stage of developing its properties in Montana, North Dakota and New York. During the fiscal year ended December 31, 2007, our operations were limited primarily to technical evaluation of the properties and the design of development plans to exploit the oil and gas resources on those properties, as well as seeking opportunities to acquire additional oil and gas properties. Accordingly, we had minimal production due to our wells commencing production near the end of the fourth quarter of 2007. We completed drilling of our first wells and began selling limited quantities of oil and gas in the fourth quarter of 2007. In the first three quarters of 2008, we increased production and expect to continue to grow production consistently throughout the remainder of 2008.

As of September 30, 2008, we recognized production revenues from 23 wells, of which twelve wells are located in Mountrail County, North Dakota, nine wells are located in Dunn County, North Dakota and two wells are located in Sheridan County, Montana. Subsequent to quarter end, we added production from an additional five wells in the Bakken formation. Our third quarter revenue has increased approximately 80 % over the second quarter of 2008.

We did not recognize any oil and gas revenues for the twelve months ended December 31, 2007. We realized our first meaningful revenues from production late in the quarter ended March 31, 2008, as we were able to establish commercial production in connection with new drilling activities commenced in 2007. Revenues from oil and gas sales in the quarter ended September 30, 2008 were $1,362,655, compared to $764,528 in the quarter ended June 30, 2008. Our average realized sales price for oil produced during the quarter ended September 30, 2008 was approximately $103.50 per barrel, compared to approximately $120.12 per barrel in the quarter ended June 30, 2008. We expect that our revenues will continue to increase quarter-over-quarter for the fourth quarter of 2008 as we continue to drill new wells and establish commercial production from our existing and new wells. Each fiscal quarter we continue to realize increased oil and natural gas volumes from wells put into production in prior fiscal quarters as well as additional wells drilled or completed in the current quarter.

Total operating expenses, including severance taxes, production expenses, general and administrative, and non-cash expenses of depletion and depreciation for the fiscal year ended December 31, 2007 were $4,513,189, for the quarter ended March 31, 2008 were $570,575, for the three months ended June 30, 2008 were $576,487 and for the three months ended September 30, 2008 were $645,957. Our operating expenses for the three months ended September 30, 2008 consisted principally of general and administrative costs. General and administrative costs for the three months ended September 30, 2008 were $355,103 compared to $410,736 for the three months ended June 30, 2008 and $507,883 for the three months ended March 31, 2008. The decrease in third quarter general and administrative costs was approximately 40% under our previously announced budget of $500,000 per quarter. We

expect operating costs to continue to increase as we proceed with our development plans. In the future we expect to incur increased geologic, geophysical, engineering and other personnel related costs.

We realized net income of $871,819 for the quarter ended September 30, 2008 and net income of $968,007 for the nine months ended September 30, 2008, compared to a net loss of $4,305,293 for the fiscal year ended December 31, 2007, a net loss of $187,277 for the quarter ended March 31, 2008, net income of $283,465 for the quarter ended June 30, 2008 and net income of $96,188 for the six months ended June 30, 2008. Approximately $500,000 of the loss experienced during the fiscal year ended December 31, 2007 consisted of a cash expense, and the balance was related to share issuance costs which are expected to decrease substantially in 2008. Approximately $125,546 of the loss experienced during the quarter ended March 31, 2008 consisted of cash expenses, and the balance was related to share issuance costs. We expect the cash general and administrative expenses to run approximately $500,000 per quarter going forward, excluding any one-time charges.

Overview of Third Quarter 2008 Operational Results

In the quarter ended March 31, 2008, we began selling meaningful amounts of oil from wells that became operational in the fourth quarter of 2007. In the quarter ended June 30, 2008, we continued to realize additional sales of oil from wells that were productive during the prior fiscal quarter and began selling meaningful amounts of oil from additional wells that became operational during the second fiscal quarter. We continued that trend during the quarter ended September 30, 2008, as evidenced by a quarter-over-quarter increase in our net income. We expect our revenue to continue to increase along with our oil production as we continue to participate in additional wells during the fourth quarter of 2008.

We realized production revenues totaling $1,029,892 from 21 wells in North Dakota during the quarter ended September 30, 2008, of which 13 wells came into production during the third fiscal quarter of 2008. As of September 30, 2008, we capitalized approximately $6,438,437 in acreage, drilling and future drilling costs for these wells.

We realized production revenues totaling $332,763 from 2 wells in Montana during the quarter ended September 30, 2008. Both of these wells were productive throughout the third quarter of 2008. As of September 30, 2008, we capitalized approximately $707,743 in acreage, drilling and future drilling costs for these wells.

Third Quarter 2008 Operational Results

The following table illustrates selected operational data for the quarter ended
September 30, 2008 compared to the quarter ended June 30, 2008.

                                                                Three Months       Three Months
                                                               Ended June 30,     Ended September
Selected Operation Data:                                            2008             30, 2008
Net Production:
Oil (Bbl)                                                               6,350              13,111
Natural Gas (Mcf)                                                         133                 412

                                                                  Three           Three
                                                                  Months         Months
                                                                  Ended           Ended
                                                                 June 30,       September
                                                                   2008         30, 2008
Net Sales:
Oil                                                            $  762,763     $ 1,356,902
Natural Gas                                                    $    1,765     $     5,753
Total Oil and Natural Gas sales                                $  764,528     $ 1,362,655

Average Sales Prices:
Oil (per Bbl)                                                  $   120.12     $    103.50
Effect of oil hedges on average price (per Bbl)                $        -     $         -
Oil net of hedging (per Bbl)                                   $   120.12     $    103.50
Natural Gas (per Mcf)                                          $    13.31     $     13.97
Effect of natural gas hedges on average price (per Bbl)        $        -     $         -
Natural gas net of hedging (per Bbl)                           $    13.31     $     13.97

Depletion of oil and natural gas properties

Our depletion expense is driven by many factors including certain exploration costs involved in the development of producing reserves, production levels and estimates of proved reserve quantities and future developmental costs at the end of the first three fiscal quarters of 2008.

                                                                                Three Months
                                                               Three Months         Ended
                                                                Ended June      September 30,
                                                                 30, 2008           2008
Depletion of oil and natural gas properties                    $    106,942     $     190,501

Operation Plan

During the fourth quarter of the fiscal year ended December 31, 2007, we commenced in earnest the development of our oil and gas properties in conjunction with our drilling partners. These activities continued to build in the first three quarters of fiscal year 2008, and are anticipated to continue to grow throughout the fourth quarter of 2008 and beyond. The Company has several projects that are in various stages of discussions and is continually evaluating oil and gas opportunities in the Continental United States. We will continue to participate on a heads-up basis in the continuing development of our substantial Bakken acreage holdings. We do not typically lease land to operators or dilute working interest. We own our proportionate share of wells and we will continue to develop higher working interest sections going forward. We will continue to acquire acreage in the play as it may become available as well as continually evaluate additional opportunities both in the Bakken and beyond.

Our future financial results will depend primarily on the following factors, among others:

Our ability to continue to source and screen potential projects;

Our ability to discover commercial quantities of oil and gas;

The market price for oil and gas; and

Our ability to fully implement our exploration and development program, which is dependent on the availability of capital resources.

There can be no assurance that we will be successful in any of these respects, that the prices of oil and gas prevailing at the time of production will be at a level allowing for profitable production, or that we will be able to obtain additional funding to increase our currently limited capital resources.

Drilling Projects

As of September 30, 2008, we had completed 23 successful discoveries, compared to ten successful discoveries completed as of June 30, 2008 and six successful discoveries completed as of March 31, 2008. As of November 6, 2008, we have completed an additional five wells, for a total of 28 successful discoveries. As of November 6, 2008, we are participating in the drilling of 15 additional wells, all of which are expected to commence production in the fourth calendar quarter of 2008. Approximately 170 sections containing NOG acreage have been permitted or docketed for permit as of November 6, 2008. We expect most, if not all, of these wells and potentially more will be drilled throughout 2009, although we have no control over the timing of such wells in our position as a non-operator in these particular wells. In addition to the proposed drilling locations, we are making preparations to drill wells on some of our high working interest locations, potentially ranging up to 100% working interest.

Upon full development of our North Dakota acreage position, we anticipate that we will be able to drill up to 101 net wells based on 640-acre spacing. In the event the Bakken field continues to be down spaced to 320-acre units, we could control as many as 203 net Bakken wells. EOG Resources previously announced calculations of 9 million barrels of oil in place per 640-acre section in the Parshall Field, of which they believe they will recover 900,000 barrels with a single lateral well. Based on a number of 500,000 barrels of recoverable oil per well, conservative relative to the EOG estimates, we may be exposed to approximately 50 million gross barrels of oil based on 640 acre spacing, excluding the Brigham joint venture acreage. On continued down spacing to 320 acre drilling units, we could be exposed up to a potential 100 million barrels of oil. In addition we believe significant amounts of oil may be recoverable from a second producing reservoir in the Three Forks/Sanish formation, this formation has the potential to increase reserves and productivity significantly. We are currently participating in four wells operated by Continental Resources and have several planned that will be targeting this formation. With the addition of the Three Forks/Sanish formation, our potential reserves may increase substantially.

Through the use of 3-D seismic data we have identified 8 high-grade conventional locations on our Sheridan County Position. Our full Montana acreage position is subject to the Brigham joint venture as long as

Brigham continues to drill on it. Should Brigham let 120 days pass without the spud of a new well the joint venture shall terminate.

The following table summarizes our producing wells as of November 6, 2008:

                                                                     Northern Oil and Gas
State/County             Operator             Well Name              Working Interest
NORTH DAKOTA - MOUNTRAIL BRIGHAM EXPLORATION  BERGSTROM TRUST 26-1H  6.25%/24% BIAPO
NORTH DAKOTA - MOUNTRAIL BRIGHAM EXPLORATION  HALLINGSTAD 27-1H      8.5%/20% BIAPO
NORTH DAKOTA - MOUNTRAIL BRIGHAM EXPLORATION  RICHARDSON 25-1        37.00%
NORTH DAKOTA - MOUNTRAIL BRIGHAM EXPLORATION  RICHARDSON 30-1        12.5%/21.25%BIAPO  (+
                                                                     1.00% ORRI)
NORTH DAKOTA - MOUNTRAIL BRIGHAM EXPLORATION  JOHNSON 33-1H          12.75%
NORTH DAKOTA - MOUNTRAIL MUREX PETROLEUM      RICK CLAIR 25-36H      6.25%
NORTH DAKOTA - MOUNTRAIL WHITING OIL & GAS    BRAAFLAT 11-11H        1.00%
NORTH DAKOTA - MOUNTRAIL WHITING OIL & GAS    FEDERAL 11-9H          .005%
NORTH DAKOTA - MOUNTRAIL SINCLAIR OIL         NELSON 1-26H           3.00%
NORTH DAKOTA - MOUNTRAIL SLAWSON EXPLORATION  PATHFINDER 1-9H        3.00%
NORTH DAKOTA - MOUNTRAIL SLAWSON EXPLORATION  PROWLER 1-16H          5.00%
NORTH DAKOTA - MOUNTRAIL SLAWSON EXPLORATION  PAYARA 1-21H           3.00%
NORTH DAKOTA - MOUNTRAIL SLAWSON EXPLORATION  VOYAGER 1-18H          5.00%
NORTH DAKOTA - DUNN      MARATHON OIL COMPANY REISS 34-20H           1.00%
NORTH DAKOTA - DUNN      MARATHON OIL COMPANY KENT CARLSON 24-36H    6.25%
NORTH DAKOTA - DUNN      MARATHON OIL COMPANY VOIGT 11-15H           1.00%
NORTH DAKOTA - DUNN      MARATHON OIL COMPANY CLIVE PELTON 34-23H    3.00%
NORTH DAKOTA - DUNN      MARATHON OIL COMPANY ECKELBERG 41-26H       3.00%
NORTH DAKOTA - DUNN      MARATHON OIL COMPANY STROMMEN 14-8H         3.00%
NORTH DAKOTA - DUNN      MARATHON OIL COMPANY WILLARD KOVALOFF 21-1H 1.00%
NORTH DAKOTA - DUNN      BURLINGTON RESOURCES BONNEY 34-3H           3.00%
NORTH DAKOTA - MOUNTRAIL HESS CORPORATION     EN-PERSON-1102H-1      12.50%
NORTH DAKOTA - MOUNTRAIL HESS CORPORATION     RS-AGRIBANK-1102H-1    7.50%
NORTH DAKOTA - MOUNTRAIL HESS CORPORATION     EN-NESET-0706H-1       3.00%
NORTH DAKOTA - MOUNTRAIL HESS CORPORATION     BL-BLANCHARD 155-96    2.50%

                                                                Northern Oil
State/County             Operator              Well Name        and Gas
                                                                Working
                                                                Interest
NORTH DAKOTA - MOUNTRAIL EOG RESOURCES         WAYZETTA 1-13H   6.25%
NORTH DAKOTA - DIVIDE    CONTINENTAL RESOURCES SHONNA 1-15H     15.00%
NORTH DAKOTA - DIVIDE    CONTINENTAL RESOURCES ARVID 1-35       5.00%

Brigham Exploration

On April 23, 2007 we entered into a joint venture agreement with Brigham Exploration. Under the terms of the agreement, we contributed 3,000 net acres of our approximate 65,000 net acres located in North Dakota and approximately 21,350 net acres of our Sheridan County, Montana acreage.

Drilling under the Brigham joint venture commenced in the early fourth quarter of 2007. On the Mountrail County, North Dakota acreage, we successfully completed the Bergstrom Family Trust 26, a Bakken well that produced at an early rate of approximately 200 gross barrels of oil per day. We participated for a 6.25% working interest that converts to 24% working interest at payout. We also completed the Hallingstad 27, a Bakken well that produced at an early rate of approximately 500 gross barrels of oil per day. We participated for an 8.4% working interest that converts to 20.5% working interest at payout.

. . .